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Financial Administration Manual Chapter 5 Accounting and Control of Expenditures

Section 5. Table of Contents Amended: 01/2016

Chapter 5 Accounting and Control of Expenditures

5.1 INTRODUCTION

5.2 ACCOUNTING SYSTEMS

5.2.1 Policy

5.2.2 Accounting Practices

5.3 ACCOUNTING POLICY

5.4 ACCOUNTING CONTROLS

5.4.1 Overview

5.4.2 Accounting Control Procedures

5.4.3 Commitment Control

5.5 SIGNING AUTHORITIES

5.5.0 Policy Statement

5.5.1 Definitions

5.5.2 Policy

5.5.3 Signing Authorities Limitations

5.5.3.1 Interpretations

5.5.3.2 Exceptions

5.5.3.3 Signing Authorities Limitations Chart

5.5.4 Procedures

5.5.4.1 General

5.5.4.2 Spending Authority

5.5.4.3 Payment Authority

5.5.4.4 Rejection of Requisitions for Payment

5.5.4.5 Delegation Process

5.5.4.6 Signing Authorities Forms

5.5.5 Interpretation Guidelines

5.5.5.1 Equipment Lease Contracts

5.6 EXPENDITURE INITIATION

5.7 ACCOUNT VERIFICATION

5.7.1 General

5.7.2 Responsibility for Account Verification

5.7.3 Account Verification Procedures

5.7.4 Preparation and Verification of Journal Entries

5.7.4.1 Application of Signing Authorities


Section 5. Table of Contents Amended: 03/2012

5.7.4.2 Procedures

5.7.4.3 Inter-departmental Journals

5.8 PAYMENT TIMING

5.9 GOVERNMENT TRANSFERS


5.9.1 Definitions

5.9.2 Policy

5.9.3 Corrective Actions

5.9.4 Responsibilities

5.9.5 Guidelines

5.10 PURCHASING OF GOODS AND SERVICES

5.11 TRAVEL

5.12 OPERATIONS AND MAINTENANCE AND CAPITAL EXPENDITURES

5.13 PAYMENTS

5.13.1 Payments Directive

5.13.2 Interest on Overdue Payments

5.14 CREDIT CARDS

5.14.1 General

5.14.2 Acquisition Card Policy

5.15 ASSIGNED DEBTS

5.15.1 General

5.15.2 Definitions

5.15.3 Debt Assignment

Financial Administration Manual


Section 5.1 Introduction Issue Date: 12/92

5.1 INTRODUCTION

This chapter describes the policies, procedures, practices and guidelines within which

departments receive authority to initiate and approve expenditure transactions for which

they are responsible.

It also sets out some of the responsibilities of service departments for controlling

expenditure transactions, including their responsibilities for cheque preparation, control

and delivery.

There must be proper financial authority and control for all government expenditures.

Authority granted by statutes generally may be amplified by regulations, directives and

guidelines issued by the Executive Council, the Deputy Minister of Finance or other

specified authorities. Departments and agencies, in initiating and approving expenditures,

are obliged to meet the requirements prescribed.

Managers having operational responsibility and budgetary spending authority may

initiate expenditures to carry out their responsibilities, as outlined in this manual and as

prescribed by other government policies and procedures.


Section 5.2 Accounting Systems Amended: 01/2016

5.2 ACCOUNTING SYSTEMS

5.2.1 Policy

All accounting systems shall conform to the requirements prescribed by the Department

of Finance. The government maintains a centrally-administered accounting system

known as the Financial Management Information System. Specialty accounting systems

which may operate within departments require prior approval of the Department of

Finance to ensure the systems are compatible with the central system and meet

government accounting requirements.

5.2.2 Accounting Practices

Departments must utilize the Government accounting and reporting services in

processing their financial transactions.

The Financial Management Information System has a database recording all departmental

accounting transactions. This database is the basis for Government of Yukon financial

statements.

Departmental accounting transactions are recorded using standardized accounting codes.

While the accounting code structure is standardized across the government, there is built-

in flexibility that allows departments to meet their unique needs. Transactions are further

identified by reference codes which may include:

a) supplier reference codes,

b) contract and transfer payment agreement numbers,

c) batch numbers, and

d) journal entry numbers.

The main cheque issuing centre is within the Department of Finance. Cheque issuance is

computerized, although manual cheques are issued on an emergency basis. The use of

manual cheques must be limited because they are costly to prepare.

Subsection 28(1) of the Financial Administration Act requires every public officer to

keep records of commitments for the expenditures chargeable to each vote or fund for

which the officer has been assigned responsibility. The objective of this requirement is to

ensure departments do not exceed their budgetary appropriation or fund balances by

anticipating future expenditures. The Financial Management Information System

provides a commitment accounting system to assist departments in tracking and the

record keeping of commitments.


Section 5.3 Accounting Policy Amended: 01/2016

5.3 ACCOUNTING POLICY

Section 33 of the Yukon Act states the Government of Yukon financial statements must be

prepared in accordance with accounting principles recommended for the public sector by

the Canadian Institute of Chartered Accountants or its successor. Consequently, the

Government's accounting policy follows the standards issued by the Public Sector

Accounting Board of the Chartered Public Accountants (CPA) of Canada. These

standards are collectively called the CPA Public Sector Accounting Handbook.

The Financial Administration Manual contains various accounting policies that are based

on CPA public sector accounting standards but tailored to the Government of Yukon and

approved by Management Board.



Section 5.4 Accounting Controls Issue Date: 12/92

5.4 ACCOUNTING CONTROLS

5.4.1 Overview

Accounting controls ensure the integrity of the accounting system. Accounting control

involves ensuring that only authorized data is entered and accepted into the system and

that this information is entered, processed and reported properly.

Accounting control must be established during system development. These controls must

be instituted and maintained throughout the system. Control techniques include, but are

not limited to:

Proper system documentation

Segregation of duties

Adequate form design

Job descriptions that accurately document responsibilities

Documented procedures

Pre-numbered forms

Control totals

Proper training

5.4.2 Accounting Control Procedures

The accounting system must have adequate controls to ensure the completeness, accuracy

and authority for and of all information. The accounting control procedures used must

satisfy both legislative and management needs in the control of public funds.

A most important element of financial control is that exercised on individual transactions

as expenditures are contemplated, committed and authorized. Departmental management

are primarily responsible for controlling individual expenditure transactions. The basic

elements of expenditure control are as follows:

Departments must ensure that before an expenditure is initiated there is a sufficient

unencumbered balance available in the relevant appropriation, allotment, or item

included in the estimates to discharge the commitment.

Departments must certify with respect to each payment that the relevant services

have been performed or goods received at prices that are either in accordance with

contract terms or are reasonable.

Departments must not requisition a payment that would be an unlawful charge

against an appropriation; would result in an




5.4.2 (Continued)

expenditure in excess of the appropriation; or would reduce the balance in the

appropriation so that it would not be sufficient to meet the commitments charged

against it.

Where a payment is to be made before completion of the work, delivery of the goods

or rendering of the service, as the case may be, departments must ensure that the

payment is in accordance with the contract.

Departments must utilize the centralized accounting and reporting services of the

Department of Finance to obtain detailed accounting information.

After payment authority has been exercised, payment requisitions should be immediately

forwarded to the Department of Finance to expedite the processing of transactions. This

ensures that payment will be prompt and that financial reports are current. The

accounting system must be designed to permit the periodic entry and reporting of

information on undischarged commitments. This permits officers exercising signing

authority or financial control to be aware of free balances for each appropriation and

allotment on a periodic basis.

In addition, the accounting system must be designed to provide accurate, periodic cost

information on the activity elements involved in carrying out departmental programs.

This requirement provides for:

Relating costs to benefits.

Comparing efficiency over a period of time or among similar responsibility centres.

Determining the amounts to be recovered when services for which a charge is

appropriate are provided to the public or other governments.

Comparing revenues recovered against related costs.

Accrual information must be entered into the accounting systems to facilitate the

provision of cost information and to meet statutory requirements.

Accounting controls must be established over inventories of materials and equipment

wherever there is a need:

Because of the value or nature of the inventories.

For independent control.

For providing information on changes in inventory levels.

For asset recording and evaluation purposes in connection with year-end financial

statements and schedules.




In summary, the accounting and internal control system should be designed to include, as

an integral part of the system, adequate accounting controls to ensure the completeness,

accuracy, and authority of all information provided by the system.

5.4.3 Commitment Control

The commitment system is an important management tool for financial control. It assists

in the decision- making process as it allows management to plan for the future. It assists

in ensuring that adequate funds are available to pay for all goods and services received in

a fiscal year, and to ensure that required administrative policies and procedures have been

followed in advance of disbursement. The recording of a commitment in advance of the

disbursement reduces the free balances of budgetary allocations and ensures funds are

reserved for future expenditures.

The commitment accounting process involves the recording of obligations to make future

payments at the time they are foreseen.

Under the Financial Administration Act, Deputy Ministers are responsible for ensuring

that they have an effective system of commitment control.

Finance has provided, as a part of the Financial Management Information System, a

mechanism to be utilized by all departments in recording commitments.

A commitment can be recognized at any of the following stages;

i) When goods or services are formally requisitioned internally, but no actual

contractual obligation is made,

ii) when the actual contractual obligation is made, or

iii) when there is a need to reserve funds to fulfill a future obligation eg. grant payments.

Commitments should be recorded as early in the process as possible.

Commitments, including adjustments to an amount previously committed must be

authorized by a public officer with commitment authority. Commitment authority is the

ability to initiate an expenditure sanctioned under Section 24 of the Financial

Administration Act. This authority is required prior to entry into the commitment system.

Commitments recorded in the Financial Management Information System must only

pertain to the current fiscal year. Commitments that are expected to result in expenditures

in future years must not be recorded as encumbrances against current year’s

appropriations.




5.4.3 (Continued)

Commitment control in the Financial Management Information System requires that all

Requisitions for Supplies, Purchase Orders and other proposed future expenditures not

expected to be decommitted within thirty calendar days be committed on the system.

If the amount of a payment exceeds a commitment created by a purchase order, the

transaction will be rejected unless the excess is within tolerated levels. The size of the

tolerance for invoices that exceed purchase order amounts is ten percent or $100, which

ever is least. The tolerance is used to facilitate processing and is intended to

accommodate slight changes in prices or quantity which are acceptable to the spending

department.


Section 5.5 Signing Authorities Amended: 01/2016

5.5 SIGNING AUTHORITIES


Authority

On March 13, 2002, the Management Board revoked MBD #6/84 "Signing Authorities"

and replaced it with subsections 5.5.0 to 5.5.3 of this manual (MBM#2-08-04). The

policy outlined in subsections 5.5.0 to 5.5.3 is issued pursuant to Sections 21, 23, 24, 29,

30 and 31 of the Financial Administration Act, and can be revised only with the approval

of the Management Board.

This policy is referred to as the Signing Authorities Policy.

Effective Date

Original Policy - April 1, 2002

Revisions to 5.5.1 and 5.5.3.3 - March 7, 2012

Application

The Signing Authorities Policy applies to all departments except as exempted by Item #8

of subsection 5.5.2.

Objective

The Financial Administration Act requires certain certifications to be made by

appropriate public officers prior to any payments being issued from the consolidated

revenue fund. The objective of the Signing Authorities Policy is to set out the policy for

assigning financial signing authorities to public officers of the government, and to

provide instructions regarding the responsibilities and limits associated with those signing

authorities.

5.5.1 Definitions

a) "Section 23 (contracting) authority" means the signing authority pursuant to Section

23 of the Financial Administration Act, and is the authority to enter into a contract on

behalf of the government.

b) "Section 24 (certification prerequisite for contracts) authority" means the signing

authority pursuant to Section 24 of the Financial Administration Act. It is the

authority to certify that:

i) every payment out of the consolidated revenue fund contemplated by the

contract is in accordance with the Financial Administration Act and any

other Act; and

ii) there is sufficient money in the vote or fund from which the payments

are made.

This authority is also referred to as "commitment authority".


Section 5.5 Signing Authorities Issue Date: 04/2002

5.5.1 Definitions (Continued)

c) "Section 29 (certificate of performance) authority" means the signing authority

pursuant to Section 29 of the Financial Administration Act. It is the authority to

certify that:

i) the proposed payment is in accordance with the contract; and/or

ii) all conditions precedent to the making of the payment have been met.

d) "Section 30 (requisition for payment) authority" means the signing authority

pursuant to Section 30 of the Financial Administration Act. It is the authority to

certify that:

i) the payment may be lawfully made from the vote or fund;

ii) the making of the payment does not contravene any directive or policy of

the Management Board;

iii) there is sufficient money in the vote or fund to make the payment;

and

iv) the making of the payment will not reduce the balance of the vote or fund

so that it would not be sufficient to meet commitments for other

payments to be made from the vote or fund.

e) "Assignment authority" means the authority to sign documents used to:

i) assign responsibility from a sponsoring department to a performing

department for a specific project;

ii) certify pursuant to Section 24 of the Financial Administration Act

maximum allowable expenditures in the fiscal year for the assigned

project; and

iii) delegate from the sponsoring department to the performing department

limited authority under Sections 23, 29 and 30 of the Financial

Administration Act to carry out the project.

Those documents include the Project Authorization and inter-departmental

service agreements.

f) "Authorization for travel" means the authorization to undertake travel on

government business in accordance with the policy and directives set by the

Management Board.

g) "Contract" means any agreement or undertaking providing for the expenditure of

public money or the giving of any consideration in exchange for goods and

services, and includes purchase orders, service contracts, construction contracts,

employment contracts and contribution agreements.


Section 5.5 Signing Authorities Amended 03/2012

5.5.1 Definitions (Continued)

h) "Loans and guarantees" means the undertaking under the authority of an Act

to provide a loan or to guarantee a debt or other obligation.

i) "Payment authority" is the same authority as the "Section 30 (requisition for

payment) authority" - see d).

j) "Public officer" means a public officer as defined in section 1 of the

Financial Administration Act, and does not include a person hired on a

consulting or service contract.

k) "Requisition for goods or services" is a document that is certified by a

public officer of a department pursuant to Section 24 of the Financial

Administration Act, which enables the purchasing or contracting officer of

the government to enter into a contract on behalf of the department.

Examples of those documents are the Request for Purchase and the Request

for Transportation.

l) "Spending authority" means the authority pursuant to Sections 24

(certification prerequisite for contracts), 23 (contracting) and 29 (certificate

of performance) of the Financial Administration Act.

m) "Transfer payments"-refer to the definition in subsection 5.9.1 of this

manual.



5.5.2 Policy

1. No payment out of the consolidated revenue fund shall be made without the

certification by appropriate public officers pursuant to Sections 24 (certification

prerequisite for contracts), 23 (contracting), 29 (certificate of performance) and

30 (requisition for payment) of the Financial Administration Act.

2. (a) A Minister and a Deputy Minister may sign pursuant to Sections 24

(certification prerequisite for contracts), 23 (contracting), 29 (certificate

of performance) and 30 (requisition for payment) of the Financial

Administration Act in an amount not exceeding the limits set out in

subsection 5.5.3.3 "Signing Authorities Limitations Chart".

(b) A Minister and a Deputy Minister shall deliver a sample signature to the

Deputy Minister of the Department of Finance and to the Deputy

Minister of the Department of Highways and Public Works.

3. A Deputy Minister may delegate to a public officer of his/her department part of

his/her signing authorities.* Such delegation shall be made to appropriate

organizational positions in the department rather than to individuals.

4. Delegation of signing authorities by a Deputy Minister shall be in writing. A

copy of such delegation and a sample signature of the public officer to whom the

delegation has been made shall be delivered to the Deputy Minister of the

Department of Finance and to the Deputy Minister of the Department of

Highways and Public Works.

5. Signing authority delegated by a Deputy Minister shall not be re-delegated.

6. A public officer shall not sign under Section 29 (certificate of performance) and

Section 30 (requisition for payment) for the same payment.

7. Pursuant to Section 31 of the Financial Administration Act, the Deputy Minister

of the Department of Finance shall reject a requisition for payment where he/she

is of the opinion that the requisition does not comply with the provisions of the

Signing Authorities Policy.

Items # 2(b), 4 and 7 above do not apply to the Yukon Housing Corporation, the Yukon

Liquor Corporation, the Yukon Workers' Compensation Health and Safety

Board, the Yukon Development Corporation and the Yukon Lottery

Commission. * On April 3, 2013, Management Board authorized public officers of the Yukon Legislative Assembly departmental office to be deemed public officers of the Child and Youth Advocate Office and the Elections Office (MBM#13-08-03)



5.5.3 Signing Authorities Limitations

5.5.3.1 Interpretations

1. The limitations represent the upper limit of authority that may be delegated by a

Deputy Minister. Lower levels may be delegated.

2. The application of financial signing authority limits is based on the concept of a

single transaction. Where a financial document, e.g. cheque requisition, contains

more than one transaction (e.g. two or more unrelated invoices), the limits stated

apply to each financial transaction, not to the total document amount.

3. The limits specified for Sections 23 and 24 authorities apply to the total value of

a particular obligation, including the amounts of any increases or decreases of the

obligation, except for construction contracts noted in Item # 2 of subsection

5.5.3.2 "Exceptions".

4. A public officer exercising contracting authority must follow Directive 2.6 of the

General Administration Manual, "Contracting Directive", and any other policies

or directives issued by the Cabinet or the Management Board with regard to

entering into a contract with a third party.

5. Project planning and implementation shall comply with Directive 2.17 of the

General Administration Manual, "Project Planning and Implementation".

5.5.3.2 Exceptions

1. A purchase contract, aircraft charter, contract for printing and publications, real

property lease and third party equipment rental (e.g. heavy equipment rental

including the provision of operators) must be entered into through the

Department of Highways and Public Works except that the Deputy Minister of

the Department of Highways and Public Works may delegate to a department the

appropriate authority. Such delegation shall be in writing.

2. Where a construction contract amount exceeds the Deputy Minister's limit, the

Minister may delegate authority to approve change orders for the specific

construction contract. The Deputy Minister may re-delegate this authority to a

public officer, only if expressly permitted to do so in the delegation from the

Minister. These delegations must be in writing, and copies of such delegations

must be sent to Contract Services of the Department of Highways and Public

Works and to the Department of Finance.

3. A Deputy Minister may not delegate the signing authority for public officers to

travel out of Territory except where specifically exempted in the travel policy or

directive set by the Management Board.

5.5.3.3 Signing Authorities Limitations Chart (Effective April 3, 2013 – MBM #13-08-03)

<--------------------------------------------------------------------SPENDING AUTHORITY-------------------------------------------------------------------------------------------------> PAYMENT

<-----------------------------------------Section 24 (Certificate Prerequisite for Contracts) Authority ------------------------------------------------> AUTHORITY

<----------------Section 23 (Contracting) Authority -------------------> Section 29 Section 30

DEPARTMENT CONTRACTS LOANS & TRANSFER AUTHORI- REQUEST ASSIGNMENT (Certificate (Requisition

FOR GUARANTEES PAYMENTS ZATION FOR GOODS AUTHORITY of for

GOODS OR FOR OR Performance) Payment) SERVICES* TRAVEL SERVICES Authority Authority

Legislative MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit

Assembly DM 35,000 - 5,000 5,000 35,000 35,000 No Limit No Limit

Child And Youth MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit Advocate Office DM 35,000 - 5,000 5,000 35,000 35,000 No Limit No Limit

Elections MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit

Office DM 35,000 - 5,000 5,000 35,000 35,000 No Limit No Limit

Office of the MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit

Ombudsman DM 35,000 - 5,000 5,000 35,000 35,000 No Limit No Limit

Executive MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit

Council Office DM 100,000 - 500,000 10,000 100,000 100,000 No Limit No Limit

Community MIN No Limit No Limit No Limit No Limit No Limit No Limit No Limit No Limit

Services DM 1,000,000 500,000 1,000,000 5,000 500,000 1,000,000 No Limit No Limit

Economic Development MIN No Limit No Limit No Limit No Limit No Limit No Limit No Limit No Limit

DM 100,000 100,000 500,000 5,000 100,000 50,000 No Limit No Limit

Education MIN No Limit No Limit No Limit No Limit No Limit No Limit No Limit No Limit

DM 500,000 6,000 250,000 5,000 500,000 1,000,000 No Limit No Limit

Energy, Mines and MIN No Limit No Limit No Limit No Limit No Limit No Limit No Limit No Limit

Resources DM 150,000 500,000 500,000 10,000 100,000 50,000 No Limit No Limit

Environment MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit

DM 150,000 - 500,000 5,000 150,000 150,000 No Limit No Limit

Finance MIN No Limit No Limit No Limit No Limit No Limit No Limit No Limit No Limit

DM 50,000 100,000 500,000 5,000 50,000 50,000 No Limit No Limit

Finance MIN - No Limit No Limit - - - No Limit No Limit

Votes 18, 19 and 22 DM - 10,000,000 10,000,000 - - - No Limit No Limit

Finance MIN - No Limit - - - - No Limit No Limit

Vote 20 DM - 2,000,000 - - - - No Limit No Limit

French Language MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit

Services Directorate DM 50,000 - 50,000 5,000 50,000 50,000 No Limit No Limit

Health and MIN No Limit No Limit No Limit No Limit No Limit No Limit No Limit No Limit

Social Services DM 750,000 10,000 750,000 5,000 200,000 500,000 No Limit No Limit

Highways and Public MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit

Works DM 1,000,000 - 50,000 5,000 500,000 1,000,000 No Limit No Limit

Justice MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit


Public Service MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit

Commission DM 75,000 - 50,000 5,000 75,000 50,000 No Limit No Limit

Tourism and Culture MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit


Women's Directorate MIN No Limit - No Limit No Limit No Limit No Limit No Limit No Limit


Yukon Housing Corporation, Yukon Liquor Corporation, Workers' Compensation Health and Safety Board, Yukon Development Corporation and Yukon Lottery Commission – as authorized by the Corporation/Board/Commission * Except for as restricted by Exception 1 of 5.5.3.2



5.5.4 Procedures

The procedures outlined in subsection 5.5.4 of this manual are issued by the Deputy

Minister of the Department of Finance under the authority of the Financial

Administration Act Section 7. The purpose of these procedures is to help departments

interpret and comply with the Signing Authorities Policy (5.5.0 to 5.5.3 above).

Any changes to this subsection, therefore, require approval of the Deputy Minister of the

Department of Finance.

5.5.4.1 General

Responsibility for the control and spending of public funds is placed on Ministers and

Deputy Ministers by the Legislative Assembly through Appropriation Acts, and through

the Financial Administration Act and regulations.

While Ministers and Deputy Ministers are responsible for the control of expenditures, in

practice, this role is carried out by delegation. Deputy Ministers may delegate financial

signing authority within their organizations in accordance with the Signing Authorities

Policy. One of the objectives of delegating signing authority is to make individual

managers primarily responsible for expenditures charged to their budgets.

Signing authorities for financial transactions may be divided into two main areas of

responsibility, i.e. spending authority and payment authority.

Spending and payment authorities should not be exercised by the same person with

respect to a particular payment. This policy recognizes the need for a division of duties

to maintain internal control. Public officers should be granted either spending or

payment authority, but not both. However, it is recognized that, in a small department,

this may not be always possible. In such circumstances, it may be necessary to delegate

to one particular officer both types of signing authority. When this is done, that officer

must not exercise both types of authority on the same payment.

5.5.4.2 Spending Authority

Spending authority is created by Sections 23, 24 and 29 of the Financial Administration

Act. These Sections make the Deputy Minister and his/her delegate accountable for all

expenditures initiated against their vote or fund.

Spending authority should be granted in relation to a position's budgetary responsibility.

Public officers with spending authority are required to indicate their approval of each

requisition for goods or services and formulation of a contract, confirming that sufficient

funds are available. Later in the process, these officers are required to confirm contract

performance and/or receipt of goods, thereby indicating that payment should be made.

Spending authority is usually delegated to public officers with program responsibilities,

i.e. program managers, and who are independent of those officers granted payment

authority. Responsibility to implement the process of account verification (see 5.7

"Account Verification") and to enforce related financial controls rest with those officials

who have delegated payment authority. However, primary responsibility for verification

of individual accounts rests with those officials who are given spending authority.



5.5.4.2 Spending Authority (Continued)

Public officers with spending authority have the responsibility to prepare and obtain all

supporting documentation necessary for the account verification process including

service contracts, purchase orders, contribution agreements, lease agreements, receipt

documentation and other back-up. These documents are essential to verify the extent of

commitment involved, agreed prices for the goods or services, precise specifications or

requirements, agreed contract conditions and complete expenditure coding.

Spending authority consists of three areas of authorities and associating responsibilities.

1. Section 24 (Certification Prerequisite for Contracts) Authority

This authority is also referred to as "commitment" authority, and is exercised when

decisions are made to obtain goods or services that will result in the eventual expenditure

of the government's funds. Examples of such decisions are:

to hire staff

to requisition supplies or services

to authorize travel

to enter into some other expenditure arrangements with other departments for

program purposes.

When a public officer signs the certification prerequisite for contracts, he/she is certifying

that:

(a) every payment out of the consolidated revenue fund contemplated by the

contract in the then current fiscal year is authorized by the Financial

Administration Act or another Act; and

(b) there is sufficient money in the vote or fund from which the payments

are to be made.

2. Section 23 (Contracting) Authority

No government contract should be entered into, or enforceable against the government,

unless it is entered into by a public officer with the appropriate contracting authority.

Contracting authority should not be exercised unless a certification pursuant to Section 24

has been made.



5.5.4.2 Spending Authority (Continued)

3. Section 29 (Certificate of Performance) Authority

This is the authority to confirm contract performance and price. By signing under this

authority, a public officer is certifying that:

(a) in the case of a payment for goods that have been supplied or services that have

been performed under a contract, a statement to that effect, and a statement that the

proposed payment is in accordance with the contract;

(b) in the case of a payment for goods that have yet to be supplied or services that have

yet to be performed under a contract, a statement to that effect, and a statement that

the proposed payment is in accordance with the contract;

(c) in the case of a payment not provided for in (a) or (b), a statement as to the purpose

of the proposed payment, and a statement that all conditions precedent to the

making of the payment have been met; and

(d) in any case, such further statements as the Management Board, by directive or

policy, may require.

A certification of performance should be made on a form authorized by the Deputy

Minister of the Department of Finance.

5.5.4.3 Payment Authority

Payment authority is created by Section 30 of the Financial Administration Act. A public

officer who has delegated payment authority certifies that:

(a) the payment may be lawfully made from the vote or fund;

(b) the making of the payment does not contravene any directive or policy of the

Management Board;

(c) there is sufficient money in the vote or fund to make the payment; and

(d) the making of the payment will not reduce the balance of the vote or fund so that it

would not be sufficient to meet other financial commitments.

These certifications entail verifying that the payment is for the purposes of the

appropriation as recorded in the Main and Supplementary Estimates, as well as verifying

compliance with the enabling legislation of the program concerned. It is also necessary to

confirm that the payment is in accordance with any other statute, regulation or directive.

The review of documents by the public officer with payment authority constitutes the

final departmental check on the appropriateness of the spending authority exercised,

account verification and payment requisitioning.

For these reasons, payment authority should be delegated to financial officers, who are

sufficiently senior to have the experience and judgment necessary for exercising payment

authority.

Financial officers with payment authority also should understand principles of internal

control. In addition to examining specific transactions, they should satisfy themselves

that various administrative processes and approvals given to them provide sufficient

segregation of duties and independence in order to preclude any likelihood of improper or



5.5.4.3 Payment Authority (Continued)

inaccurate payments taking place.

For example, in order to exercise an appropriate internal control (or segregation of

duties), payment authority should not be delegated to positions where the primary duties

require close involvement in the preparation of cheque requisitions, performance

certification or data input into the accounts payable system.

A requisition for payment should be made on a form authorized by the Deputy Minister

of the Department of Finance.

5.5.4.4 Rejection of Requisitions for Payment

Pursuant to subsection 31(1) of the Financial Administration Act, the Deputy Minister of

the Department of Finance may reject a requisition for payment when he/she is of the

opinion that the requirements of any Act have not been complied with. The Deputy

Minister of the Department of Finance may reject a requisition for payment:

(a) if a requisition for payment has not been signed by a public officer authorized to do

so in accordance with the Signing Authorities Policy; or

(b) if the Department of Finance has not received a sample of the signature of the

public officer; or

(c) if he/she is of the opinion that the requirements of any Act have not been complied

with.

When the Deputy Minister of the Department of Finance rejects a requisition for payment

under this authority, he/she must, at the request of the Deputy Minister responsible for the

relevant vote or fund, state the reason in writing (subsection 31(2) of the Financial

Administration Act).

Subsection 31(4) of the Financial Administration Act provides the Deputy Minister of the

Department of Finance the authority to delegate any employee of any department the

function of reviewing payment requisitions.

Based on this authority, the Deputy Minister of the Department of Finance has delegated

the function described in subsection 31(1) of the Financial Administration Act to those

public officers granted payment authority. The Deputy Minister then instructed the

Department of Finance to perform post-audit of accounts payable transactions in order to

ensure that this function is exercised properly.

5.5.4.5 Delegation Process

Through written delegation of financial signing authorities, Deputy Ministers delegate

responsibilities bestowed upon them by legislation or regulations to appropriate public

officers in the departments.

Delegation of signing authority by a Deputy Minister to officers of his/her department is

primarily intended to facilitate the process of spending the funds that are made available

for departmental programs. Such delegation, however, also accompanies the

responsibility to ensure that all the related managerial and financial controls are



5.5.4.5 Delegation Process (Continued)

effectively enforced and that all the normal requirements of probity and prudence are

observed. It is important, therefore, that the delegation of financial signing authorities be

carried out and controlled by the Deputy Minister with the objective of achieving the

most effective control over spending.

Pursuant to the Signing Authorities Policy, the following rules apply to the delegation of

financial signing authorities:

1. The right to delegate signing authorities is limited to Deputy Ministers, and such

delegation must be made in writing.

2. Signing authorities must be delegated to positions rather than to individuals.

3. The signing authorities of a position may be exercised by a public officer who is

acting in the position, only if (a) a written notification of the acting appointment

has been issued by his/her supervisor and such notification has been received in the

Department of Finance; and (b) a specimen signature of the public officer has been

received in the Department of Finance.

4. Public officers may not exercise signing authorities with respect to a payment from

which they or their relative may benefit. This includes any payments made payable

to themselves for the purpose of travel or courses.

For delegation of signing authorities, the following steps should be followed.

Step 1: Deputy Minister's Delegation

Deputy Minister's delegation should be in the format shown in 5.5.4.6. Form A -

"Delegation of Financial Signing Authority Chart". Signing authorities must be

delegated to appropriate organizational positions in the department rather than to

individuals. Amendments to this delegation will only be required for changes in

organizational structure and responsibility. Amendments will not be required for

personnel changes.

When there is a change of delegating authority, i.e. a new Deputy Minister, a new

delegation chart must be approved and signed by the new Deputy Minister.

Departments must then submit the signed delegation to the Department of Finance and

the Department of Highways and Public Works by the method prescribed by the

respective Department. The signed Delegation of Financial Signing Authority Chart

should be accessible by all units and branches in the department where signing authorities

must be verified.

Step 2: Filling Out a Specimen Signature Card

A Specimen Signature Card (5.5.4.6. Form B) must be used to provide a sample of the

incumbent's signature. A Specimen Signature Card also serves to clearly indicate to the

delegate the responsibilities and limitations associated with the delegated signing

authorities.



5.5.4.5 Delegation Process (Continued)

A Specimen Signature Card should be filled out as soon as a new incumbent assumes the

position with delegated signing authorities. Departments must then submit the Specimen

Signature Card to the Department of Finance and the Department of Highways and

Public Works by the method prescribed by the respective Department. The incumbent

should also retain a copy to ensure that signing authorities are exercised appropriately.

When a public officer acts in a position with delegated signing authorities, the supervisor

of the position must issue a written notification of the acting appointment, (Note: the

Deputy Minister may issue a written notification of the acting appointment for his/her

own position), and a copy of such notification must be submitted to the Department of

Finance. The department must also ensure that a Specimen Signature Card for the acting

position is in place for the public officer.

Departments must submit written notifications to the Department of Finance and the

Department of Highways and Public Works, to revoke the card as soon as the incumbent

ceases to be in the respective position.

Review and Maintenance of Signing Authorities Delegation Documents

Deputy Ministers must arrange for an annual review of delegated signing authorities to

determine their continuing validity.

Departmental administrators should ensure that all signing authorities delegation

documents are valid at all times. Departmental administrators must also ensure that

branches and units have access to the most current signing authorities delegation

documents.

In keeping with the Deputy Minister of Finance's role and responsibilities under the

Financial Administration Act, the Department of Finance is responsible for retaining the

official records of signing authority delegation for control and audit purposes.

5.5.4.6. Signing Authorities Forms

Form A - Delegation of Financial Signing Authority Chart

(If there are multiple pages, every page requires signatures.)

Form B - Specimen Signature Card



5.5.5 Interpretation Guidelines

5.5.5.1. Equipment Lease Contracts

When a department has determined that leasing as opposed to owning a piece of

equipment represents the best value, and therefore wishes to enter into an equipment

lease contract, the department must, first of all, determine if the lease is considered to be

an operating lease or a capital lease.

In accordance with generally accepted accounting principles, an equipment lease would

be considered to be a capital lease if one or more of the following conditions are present:

a) There is reasonable assurance that the government will obtain ownership of the

leased equipment by the end of the lease term. Reasonable assurance would be

present when the terms of the lease would result in ownership being transferred to the

government by the end of the lease term or when the lease provides a bargain

purchase option*.

b) The lease term is of such duration that the government will receive substantially all

of the economic benefits expected to be derived from the use of the leased equipment

over its life span. The government, as a lessee, would normally be expected to

receive substantially all of the economic benefits when the lease term is equal to a

major portion (usually 75% or more) of the economic life of the leased equipment.

c) The lessor would be assured of recovering the investment in the leased equipment

and of earning a return on the investment as a result of the lease agreement. This

condition would exist if the present value, at the beginning of the lease term, of the

minimum lease payments, excluding any operating costs (e.g. insurance, maintenance

costs, etc.), is equal to substantially all (usually 90% or more) of the fair value of the

leased property, at the inception of the lease.

*Bargain purchase option is defined as a provision allowing the government, at its

option, to purchase the leased equipment for a price that is sufficiently lower than

the expected fair value of the equipment at the date the option becomes exercisable,

that exercise of the option appears, at the inception of the lease, to be reasonably

assured.



5.5.5.1 Equipment Lease Contracts (Continued)

If an equipment lease is determined to be an operating lease, this contractual agreement is

considered to be a service contract. However, if an equipment lease is determined to be a

capital lease, this lease agreement must be considered to be a purchase contract. In this

instance, the department must forward a Request for Purchase with the proposed lease

agreement to Supply Services. Supply Services will review the lease agreement and sign

the lease as the contracting authority.

As for the application of the Contracting Directive, an operating lease is deemed to be a

price-driven contract while a capital lease is deemed to be a goods procurement contract.

The dollar value, in applying the sourcing thresholds under section 18 of the Contracting

Directive, must be based on the total lease payments under the lease, not the present

value.

Regardless of whether a lease is considered to be operating or capital, departments should

forward all equipment lease agreements to Supply Services for their review before

signing.

If (a) an equipment lease is considered to be a capital lease, and (b) the present value of

minimum lease payments is over the threshold for capitalization, the equipment must be

capitalized and reported in accordance with subsection 8.7.3.9 of the Tangible Capital

Assets Accounting Policy, “Capital Lease”.


Section 5.6 Expenditure Initiation Amended: 04/02

5.6 EXPENDITURE INITIATION

Expenditure initiation refers to any action taken by a Minister, Deputy Minister or public

officer which will result in an obligation to make a disbursement of government funds.

Expenditure initiation may involve:

A requisition for goods.

A memorandum directing the payment of a grant or contribution.

An application or requisition for an accountable advance.

Authority for travel or removal documentation.

Hiring of an employee.

Other procurement action.

Departments must acquire their goods and services in accordance with government

policies and procedures. Purchases of goods and service must be in accordance with

Cabinet and Management Board policies and directives.

Whatever method is used for initiating expenditures, such initiation must have the written

approval of the responsible spending official who has authority for the budgetary

allocation to be charged. The approval of the spending authority at this point indicates

that the proposed expenditure is necessary for the conduct of government business and

that funds are available in the budget for which he or she has signing authority.

If dollar or other limits are placed on the signing authority of the spending officer for

initiating expenditure transactions, these limits must be adhered to.

At the beginning of each fiscal year, once the Appropriation Act is passed, the relevant

budget amounts are entered into the Financial Management Information System and this

defines the limits within which Program Managers must work.

Expenditures are controlled by comparison to the budget by program/activity and

standard object of expenditures as recorded within the Financial Management

Information System.

Expenditures shall not be initiated which exceed budgetary allocations or which lack

specific approvals where such approvals are prescribed.


Section 5.7 Account Verification Amended: 04/02

5.7 ACCOUNT VERIFICATION

5.7.1 General

The expenditure process within the government must be conducted with a high degree of

probity at all times. This is especially important in the approval for payment process.

Confirmation of contract performance and price by the program manager and payment

authority by the finance officer are critical functions.

To achieve and maintain a high standard of probity in their payment functions, Deputy

Ministers should establish a division of duties and responsibilities throughout the entire

chain of procurement of goods and services - confirmation of contract performance,

account verification, cheque requisition preparation and cheque requisition signatures.

The division of duties is recognized as the principal and most effective means of

preventing, or at least diminishing, the possibility of fraud or errors.

A second important principle in establishing and maintaining high standards of probity in

the payment functions is to establish appropriate procedures that must be followed for the

verification of accounts before payment.

5.7.2 Responsibility for Account Verification

Program Managers

Program Managers must confirm contract performance and price ensuring that all

payments are:

1. In accordance with all relevant acts, regulations, directives, and policies and

procedures.

2. In accordance with the terms, conditions and specifications as contained in contracts,

agreements or other arrangements.

3. For work that has been performed, goods supplied or services rendered, as applicable.

4. Accurately requisitioned and complete in terms of having all necessary supporting

documentation including contracts, leases, purchase orders, program arrangements

and receipt documentation.

5. Identified correctly.

6. Authorized by appropriate levels or authority.

7. A proper charge against the appropriation, or if not an expense item, that the payment

is for the purpose for which its money was made available.

8. Available within the dollar limits of an appropriation and that payment will not

reduce the balance to a level less than the commitments charged against it.



5.7.2 Responsibility for Account Verification (Continued)

Financial Officers

Financial officer is responsible for ensuring that all account verification procedures have

been carried out and that the information appearing on a cheque requisition is accurate.

The primary responsibility for the enforcement of the financial procedures and controls

rests with the departmental financial officer.

Section 30 of the Financial Administration Act requires that no payment shall be

requisitioned by a department that would not be a lawful charge against the appropriation.

This entails verifying that the payment is for the purposes of the appropriation, as defined

in the Main or Supplementary Estimates, and includes verifying compliance with the

enabling legislation of the program concerned. It is also necessary to confirm that the

payment is in accordance with any other statute, regulation or policy directive.

The review of documents by the financial officer exercising payment authority

constitutes the final departmental check in the process of expenditure initiation, account

verification and payment requisitioning.

Signing by the financial officer under Section 30 of the Financial Administration Act

means that:

1. Sections 23, 24 and 29 of the Financial Administration Act have been properly

exercised.

2. Account verification procedures (see 5.7.3) have been adequately carried out.

3. The charge is within the authority of the appropriation.

4. Adequate funds exist in the budget to pay the charge.

5. Contracts, purchase orders or other procurement arrangements were duly executed.

6. Generally accepted accounting principles for handling the financial data have been

adhered to.

7. Accounting principles involved in processing the accounts have been applied on a

basis consistent with that of the preceding year.

8. Authority has been exercised according to the delegated signing authority documents.

9. Where a debt has been assigned, the payment is requisitioned in favour of the

assignee.

10. The appropriate coding is identified on the requisition.

Officers who exercise payment authority should carry out adequate test checks to assess

the quality of the review at the primary level of responsibility. However, care should be

taken to avoid introducing a duplicate verification process.



5.7.3 Account Verification Procedures

General

The process of account verification should begin at the earliest possible moment. The

procurement process for goods and services may be relatively short and simple, eg.

requisitioning a simple purchase through Supply Services, or it may be protracted and

complex, eg. entering into a construction contract.

Receipt of Accounts

All invoices received by departments or agencies should be date-stamped by the mail

clerk when received and immediately passed to the invoice clerk for processing.

Action by Invoice Clerk

Persons responsible for invoice processing should take the following action:

Confirm that invoices have been date stamped.

Compare invoices with procurement orders and receipt documents to confirm that the

goods were received and that the description, quantity, and prices are in agreement

with the relevant purchase orders, contracts or other procurement documents.

Compare invoices being processed with previous payments to ensure that the supplier

has not received settlement for any item shown on the invoice being processed for

payment, and that the invoice is not a duplicate of an invoice previously passed for

payment.

When an invoice is for services, obtain certification of satisfactory performance from

an appropriate signing authority.

Check arithmetical correctness of invoices.

Segregate “discount” invoices, process them promptly and ensure they are forwarded

for payment without delay.

When an invoice does not include a discount although the applicable contract or

agreement provides for one, normal discount action should be taken and the invoice

processed accordingly.

When an invoice is adjusted for any reason, the original figures recorded on the

invoice should not be altered. The adjusted amounts, with an appropriate explanation,

should be written in “red” beside the original figures.

Consolidate invoices for the same supplier under one cheque requisition.

Complete Cheque Requisition form YG358 and staple it to the front of the invoice

and related back-up.



5.7.3 Account Verification Procedures (Continued)

Credit Notes

When feasible, credit notes should be deducted from the total of the related invoice.

However, when the related invoice has been processed for payment before the credit note

is received, the note may be deducted from another invoice of that supplier or submitted

separately if the supplier receives payments regularly.

When a credit note cannot be applied against an invoice as outlined above, a government

invoice must be raised and forwarded to the supplier.

Payment Requisition Procedures

When cheque requisitions are received from the invoice clerk, the supervisor should

review all the documents to ensure that the actions outlined in Section 5.7.3 were

followed. The appropriate signing authorities must then be obtained.

On completion of payment certification, the invoices and supporting documents should

be returned to the invoice clerk for batching and accounts payable data processing.


Section 5.7 Account Verification Issued: 04/2010

5.7.4 Preparation and Verification of Journal Entries

In this section, the term “journals” is used to mean “journal entries” or “journal

vouchers”. General ledger entries for payroll transactions through the payroll system and

accounts receivable general ledger entries through the creation of government invoices in

the accounts receivable module are excluded from this section.

5.7.4.1 Application of Signing Authorities

1. As noted in the Policy Statement of the Signing Authorities Policy (subsection 5.5.0

of this manual), the Signing Authorities Policy was issued pursuant to Sections 21,

23, 24, 29, 30 and 31 of the Financial Administration Act. These sections apply to

payments out of the consolidated revenue fund; therefore, the Signing Authorities

Policy does not apply to journals that do not result in issuance of payments.

2. Departments, however, must apply Sections 29 (certificate of performance) and 30

(requisition for payment) authorities on journals as a means of internal control. That

is, the relevant components of control expressed in these Sections must be utilized for

the certification of journals.

For the purpose of complying with the dollar limits associated with Sections 29 and

30 authorities, in a journal, each line is considered to be a transaction. Care should

be taken in how a journal is prepared so that the intent of these Sections is

appropriately applied.

5.7.4.2 Procedures

The objective of this set of procedures is to ensure that journals are properly managed,

authorized and accounted for accurately and in an efficient manner.

Primarily, procedures should be established such that:

all journals are created as soon as they are recognized as being required. They

should not be left to accumulate, particularly if the amounts involved are

material.

if there are material effects to the budget, appropriate recording of the changes in

commitments should be recorded and tracked.

Secondly, procedures should be established such that all staff who manage a budget:

and who have appropriate signing authority either directly approve the journal

that affects their budget, or

are properly informed of such journals that will affect their budget in a timely

manner.



5.7.4.2 Procedures (Continued)

Journals are to be properly coded and period-dated, ensuring that there is appropriate

supporting documentation.

As noted under subsection 5.7.4.1, for internal control purposes, signatures certifying

approval of a journal under Section 29 (certification of performance) and Section 30

(requisition for payment) of the Financial Administration Act must be appended prior to

the journal being posted to the general ledger.

5.7.4.3 Inter-departmental Journals

For an inter-departmental journal, each department must approve its own general ledger

codes, unless the journal transactions fall within a valid “Standing Assigned Journal

Authority” (see below).

Standing Assigned Journal Authority

(i) Definitions

“Standing Assigned Journal Authority” means that, for specified types of system-

generated chargeback journals, the Deputy Minister of the sponsoring department has

made a standing assignment of Section 29 (performance certification) and Section 30

(requisition for payment) authorities under the Financial Administration Act for

his/her department to the Deputy Minister of the performing department.

“Sponsoring department” means a department which has budget authority for a

project or services to be rendered.

“Performing department” means the department which performs work on a project or

renders services.

(ii) Objective

The objective of the Standing Assigned Journal Authority is to facilitate timely

processing of low-risk chargeback journals generated from a sub-system.

(iii) Rules for Exercising Standing Assigned Journal Authority

1. The “Standing Assigned Journal Authority” only applies to journals. It must not

be used for issuing of payments, i.e. cheque requisitions. The Signing

Authorities Policy (subsection 5.5 of this manual) prohibits the Deputy Minister

of a department to delegate his/her signing authorities for payments outside

his/her department.



5.7.4.3 Inter-departmental Journals (Continued)

2. The sponsoring department must identify the standing assignment of Sections 29

(performance certification) and 30 (requisition for payment) signing authorities

for electronic chargeback journals to the Deputy Minister of another department

on its Delegation of Financial Signing Authority Chart (Form A).

3. A chargeback is considered to be low-risk when the dollar amount is relatively

low and the performing department is anticipating the charge prior to its actual

posting. That is, there are no surprises.

4. The “Standing Assigned Journal Authority” is only operative if a valid Section

24 (commitment authority) assignment has been executed for the transaction, e.g.

Central Stores Requisition, Fleet Vehicle Request, Pool Vehicle Service

Agreement, etc.

Section 24 (commitment authority) assignment will at a minimum indicate:

the type of goods or services to be provided,

the expected cost or a maximum committed cost,

GL code of the sponsoring/requesting department; and

the indication of Section 24 sign-off by the appropriate public officer.

5. The Deputy Minister of the performing department may delegate the Standing

Assigned Journal Authority to public officers of his/her department. This

delegation must be done by utilizing the Delegation of Financial Signing

Authority Chart (Form A).

6. During the process of electronic chargebacks, there must be auditable evidence of

Sections 29 (performance certification) and 30 (requisition for payment) signing

authority executions by two separate public officers who have the appropriate

Standing Assigned Journal Authority.

7. The Deputy Minister of the sponsoring department may unilaterally withdraw all

or part of the standing assignment journal authority at any time by issuing a

memo that indicates what authorities have been withdrawn and noting the reason.



(iv) A Sample Memo for Establishing Standing Assigned Journal Authority

From: << Name of DM >> Deputy Minister Name of the Sponsoring Department To: << Name of DM >> Deputy Minister Name of the Performing Department Re: Standing Assigned Journal Authority This memo assigns limited authority for approving Sections 29 and 30 of the Financial Administration Act on our Department’s entries on inter-Departmental journals. The limitations are that this assignment is valid only for (1) the Expenditure types listed below or attached and (2) when a Section 24 Assignment for the transaction(s) has been executed. This form records (check box):

Set-Up (new) X

Changes:

Addition ...

Withdrawal ... (noting reason for change)

(Reason: ____________________________________) Date Effective: 02/Dec/2009 Date to Renew: None, as Indefinite (optional for date) Type of Expenditures (Description) (or appended List)

Type of Expenditure

(Sample)

FVA - Pool Vehicle monthly/annual Rental

FVA - Pool Vehicle Kilometer Charges

FVA - Vehicle Fuel Costs

FVA - Vehicle daily/weekly Rentals

Central Stores Costs

Signed: __________________________ Date: __________________ << Name of DM >> Deputy Minister of Sponsoring Department (Assigning) CC: Department of Finance

(v) Form A of Sponsoring Department - Example

Delegation of Financial Signing Authority Chart

FORM A

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POSITION TITLE *AREA OF AUTHORITY **DEPUTY MINISTER All Departmental Codes xxx xxx xxx x xxx xx NL NL

Deputy Minister – Highways & Public Works

All Departmental Codes for: Central Stores Supplies (Chg Back jvs) FVA – Vehicle Expenses (Chg Back jvs)

xx xx

Every officer of the Department appointed to a position listed above, including any officer appointed officially on an acting basis, and upon completion of the Specimen Signature

Card for this position, is hereby granted financial signing authority in respect to the area of the Department for the functions as indicated.

*Area of Authority - can be in text Recommended: Example: O&M and Capital, the region the position is responsible for

All departmental assets and liability accounts Date Departmental Administrator **Section 23 &/or Section 24 for Deputy Minister Approved: - Dollar amount must be typed in. (See 5.5.3.3) Date Deputy Minister

NL = No limit

Distribution: Original - to Accounting Services, Department of Finance Copy 2 - Department Copy 3 - Supply Services REV. 04/03


Section 5.7 Account Verification Issue Date: 04/2010

(This page intentionally left blank)


Section 5.8 Payment Timing Issue Date: 12/92

5.8 PAYMENT TIMING

General

No payment should be made prior to the date on which payment is due unless an early

payment discount is available. Discounts taken must be credited to the program.

The Department of Finance can modify the payment terms on individual cheques for

financial management purposes if necessary.

Invoices for Goods and Services

Invoices are due 30 days after receipt of the invoice or of the goods or services,

whichever is later.

Construction Contracts

Payments are due 30 days after authorization of the engineer responsible for the project,

except where different timing is specified in the contract.

Refunds

Refunds are due thirty days following receipt of claim or determination of overpayment

by supplier.

Loans and Investments

Loans and Investments are due on the date specified by the loan agreement or contract.

Grants and Contributions, Accountable Advances, and Social Program Payments

These payments are due on the date determined by legislation, agreement or by an

individual with appropriate spending authority.

Exceptions to these payment due dates must be specifically approved by the Deputy

Minister of Finance.


Section 5.9 Government Transfers Amended: 03/2018

5.9 GOVERNMENT TRANSFERS


Authority

Subsections 5.9.0 to 5.9.4 of this manual were approved by Management Board on

February 20, 2008 (MBM #08-04-03); therefore, these subsections can be revised only

with the approval of Management Board.

Subsections 5.9.0 to 5.9.4 of this manual shall be referred to as the “Government

Transfers Policy”.

Effective Date

April 1, 2008 with a transitional period of one year

Application

This policy applies to all “departments” as defined in subsection 1(1) of the Financial

Administration Act.

This policy applies to all government transfers as defined in subsection 5.9.1.c).

Objective

The objective of this policy is to ensure that all government transfers are authorized,

delivered, accounted for and evaluated in an accountable manner and in accordance with

public sector generally accepted accounting principles, while serving recipient and

stakeholder needs and effectively managing risks.

5.9.1 Definitions

a) Exchange transactions are transactions in which one entity receives assets or services,

or has liabilities extinguished, and directly gives approximately equal value (primarily in

the form of cash, goods, services, or use of assets) to another entity in exchange.

b) A funding program is a program, the goal of which is to enable departments to achieve

their departmental and program objectives by providing funding to entities outside

government. In a funding program, program guidelines such as eligibility criteria,

application and approval processes, and the determination of funding amounts, are

available to the public. (See subsection 5.9.5.3 of the Guidelines for examples of funding

programs.)

c) Good standing means that a transfer payment recipient has fulfilled any obligation it

may have to register and complete annual or other filings required to maintain

compliance with an act. The preferred method of confirming compliance is by obtaining a

certificate of status from the Yukon Corporate Online Registry (YCOR). This can be



done free of charge by employees of the Yukon government. Note that not all transfer

payment recipients will be required to register under an act.

d) Government transfers are transfers of money or non-monetary assets (such as

inventories and tangible capital assets) from the government to an individual, an

organization or another government for which the government does not receive goods or

services directly in return, as would occur in a purchase/sale or other exchange

transactions.

It is assumed, however, the government uses transfers as a means to carry out its mandate

and achieve its goals and objectives; hence, the government would benefit from making

those transfers. The government may, as a condition of a transfer, require receipt of a

product such as a report or a sample of the developed product, as proof of performance.

Government transfers do not include loans, loan guarantees, transfers made through a tax

system, settlements of lawsuits or other types of legal compensation provided by the

government or investments.

e) A legislated grant is a type of transfer payment where the government must make the

transfer payment if the applicant meets specified eligibility criteria. Such transfers are

non-discretionary in the sense that both: (i) “who” is eligible to receive the transfer; and

(ii) “how much” is transferred; are prescribed in legislation and/or regulations. Examples

of legislated grants are social assistance payments and grants to secondary school

students who meet the predetermined eligibility criteria. (See subsection 5.9.5.3 of the

Guidelines for other examples of legislated grants.)

f) Municipality means any part of the Yukon established as a city or town under the

Municipal Act.

g) Not-for-profit (or non-profit) organizations are entities, normally without transferable

ownership interests, organized and operated exclusively for social, educational,

professional, religious, health, charitable or any other not-for-profit purpose.

h) A non-government organization (NGO) is a not-for-profit organization that is not

controlled by a government and pursues matters of interest of its members by lobbying or

direct action. NGO is generally used for arts, social cultural, legal or environmental

advocacy groups.

i) Operational funding is funding directed to an organization’s operations as a whole

rather than to particular projects (project funding). If an organization has separate

programs, departments or divisions, support for a particular program is also considered to

be operational funding. Operational funding generally runs on an annual basis.

j) Project funding is support directed to a specific project which has a start date and an end

date.



k) A results-based management approach is an approach that focuses on results, i.e.

output and performance, as well as evaluation and reporting requirements to measure

those results. (See also subsection 5.9.5.2 of the Guidelines.)

l) A risk-based (or risk management) approach is a systematic approach to identifying

the risks that could result in the program not meeting its goals, defining the level of risk

that is acceptable, and providing the tools to manage risks. Risk factors can be either

financial, non-financial or both. In a funding agreement, typically performance

evaluation requirements and level of monitoring will be adjusted to mitigate estimated

risks. (See also subsection 5.9.5.2 of the Guidelines.)

m) A transfer payment is a monetary payment made by the government to a recipient for a

specific purpose, namely to further a government program objective, which does not

result in the procurement by the government of tangible capital assets, inventories, goods

or services, as would occur in an exchange transaction. A transfer payment is

commonly referred to as a “grant”, “contribution”, “funding”, or “assistance”.

n) A transfer payment agreement is a written agreement that legally binds the government

(as the transferor) and the recipient as to the amount, terms and conditions of the transfer

payment. (See also subsection 5.9.5.4 of the Guidelines.)

5.9.2 Policy

1. Government transfers are one of the vehicles that are used to achieve government’s goals

and objectives. Before making a decision to establish a funding program or entering into

a transfer agreement (either part of or outside of a funding program), departments must

ensure that it is an appropriate vehicle to achieve departmental goals and objectives.

2. All funding programs shall be approved by Management Board. Any significant

subsequent changes to the program, e.g. changes to terms and conditions of the program,

program parameters, eligibility criteria, etc., including termination of the program must

be approved by Management Board. Departments shall review and evaluate funding

programs in accordance with the results-based guidelines laid out in section 5.9.5.2. A

report of such evaluation must be submitted to Management Board.

3. Any legislated grant program shall be established by an act. Budgets for legislated grants

must be approved by the Legislative Assembly. Only the Legislative Assembly may

approve an increase or decrease to the budget for a legislated grant program.

4. Departments must use a results-based and risk-based management approach in designing

a funding program and drafting a transfer payment agreement, while adopting a citizen-

focused approach to managing funding programs and individual transfer payment

agreements. (Refer to subsection 5.9.5.2 of the Guidelines.)

5. Any transfer payment agreement with a term in excess of three years shall be approved

by Management Board.



6. Departments shall make transfer payments with due regard for the government’s cash

management practices as well as the recipient’s cash flow requirements. Installment

payments and advance payments, if required, shall be made in accordance with

subsection 5.9.5.4 of the Guidelines. Any exception to this directive must be approved

by Management Board.

7. Notwithstanding the above, no advance payment in excess of $10,000 shall be made to a

recipient in one fiscal year when the related expenditures of the recipient are not likely to

be incurred until the following fiscal year. Advances required for the expenditures that

are to be incurred in the following fiscal year must be issued as of April 1 and charged to

an appropriation in the new fiscal year.

8. A transfer of a tangible capital asset shall be recognized as an expense at the net book

value of the tangible capital asset and reported as a government transfer.

9. Any prospective recipient of a transfer payment, except for a legislated grant, must

declare any amounts owing to the Yukon Government. In principle, an entity that owes a

debt to the government should not receive funding from the government. This directive

does not apply to social assistance payments or to an entity that has arranged a mutually

agreed upon repayment schedule with the government and is in good standing.

10. In accordance with the General Administration Manual Policy 3.39 “Conflict of Interest”,

government employees must disclose and address their involvement in application

organizations, either in their capacity as officers or representatives, and absent

themselves from any discussion, decision making process, or any other capacity that

could be perceived to be in a conflict of interest situation. A Yukon Government

employee who holds an executive position in the recipient organization should refrain

from signing the funding agreement as there may be perception of possible influence over

the funding decision.

11. Departments shall enter all transfer payment agreements, except those classified as

legislated grants, into a corporate system in the manner instructed by the Department of

Finance.

12. All transfer payments shall be reported in the Public Accounts in a format determined by

the Department of Finance.

13. If the recipient of the transfer payment is a society, a certificate of status shall be obtained

from the Registrar of Societies certifying that the Society has filed the documents

required to be filed under the Societies Act. If the recipient of the transfer payment is a

company, a certificate of status shall be obtained from the Registrar of Companies

certifying that the company has filed the documents required to be filed under the

Corporations Act.


Section 5.9 Government Transfers Issue Date: 10/2017

5.9.3 Corrective Actions

1. If the Deputy Minister of the Department of Finance assesses that a department failed to

comply with requirements of this policy and guidelines, the Deputy Minister of the

Department of Finance shall recommend that the Deputy Minister of the department:

a) conduct an audit or an evaluation. The cost of such an audit or evaluation shall

be paid by the department; and/or

b) take corrective action based on the recommendations made by the Deputy

Minister of the Department of Finance.

2. If the Deputy Minister of the Department of Finance assesses that a department has failed

to conduct an audit or evaluation and/or to implement the corrective action pursuant to

paragraph 1 of this subsection, the Deputy Minister of the Department of Finance may

recommend to Management Board further corrective actions to be taken, which may

include:

a) reducing the spending authority of the respective Deputy Minister; or

b) suspending the funding program pending further evaluation.

5.9.4 Responsibilities

1. Cabinet

Cabinet is responsible for:

o approving draft legislation to establish or amend all legislated grant programs for

tabling in the Legislative Assembly.

2. Management Board

Management Board is responsible for:

o approving a government transfer policy and any changes to the policy;

o approving the creation, changes to and termination of all funding programs;

o approving a transfer payment agreement that has a term in excess of three years; and

o directing corrective actions to be taken as recommended by the Deputy Minister of

the Department of Finance.



3. Minister of a Department

The Minister of a department is responsible for:

o ensuring funding programs and transfer payment agreements are designed, approved

and delivered in accordance with this policy and guidelines;

o recommending approval to Management Board and, if it is a legislated grant

program, to Cabinet, on the design, redesign or termination of funding programs and

the corresponding financial control framework and the program terms and conditions

based on a results and risk-based management as well as a citizen-focused approach;

o authorizing transfer payment agreements that are above the Deputy Minister’s

spending authority limit; and

o ensuring that appropriate and timely corrective actions are taken within the

department when any provisions of this policy and guidelines have not been

adequately applied.

4. Deputy Minister of the Department of Finance

The Deputy Minister of the Department of Finance is responsible for:

o issuing, repealing or amending, from time to time, guidelines in support of the

Government Transfers Policy;

o monitoring, evaluating and advising on departments’ compliance with this policy and

guidelines;

o recommending to the Deputy Minister of a department that the department take

corrective actions, which are within his/her authority, in relation to any transfer

payment arrangement that has been determined to be in violation of this policy and

guidelines; and

o recommending to Management Board corrective actions to be taken when

departments have not responded to his/her recommendations in relation to this policy

and guidelines.



5. Deputy Minister of a Department

The Deputy Minister of a department is responsible for:

o ensuring funding programs and transfer payment agreements are designed, approved

and delivered in accordance with this policy and guidelines;

o advising the Minister on the requirements of this policy and guidelines;

o recommending to the Minister the design, redesign or termination of funding

programs and the corresponding financial control framework, the system of internal

controls, the program terms and conditions based on a results and risk-based

management as well as a citizen-focused approach;

o authorizing transfer payment agreements in accordance with this policy and

guidelines;

o ensuring that the departmental staff remain independent and at arm’s length from

recipients and that any departmental representative on a recipient’s advisory

committee or board be excused from any decision making process pertaining to the

transfer;

o ensuring departmental capacity exists to effectively deliver and administer the

funding program and/or transfer payment agreements including monitoring and

training;

o providing a report on a timely basis to the Deputy Minister of the Department of

Finance regarding significant events of contractual default or wrongdoings such as

fraud or the inappropriate use of funds that comes to his or her attention; and

o ensuring that appropriate and timely corrective actions are taken within the

department when any provisions of this policy and guidelines have not been

adequately applied.

6. Director of Finance or Equivalent of a Department

The Director of Finance of a department is accountable to the Deputy Minister for:

o advising the Deputy Minister on the application of this policy and guidelines;

o advising program officers on the application of this policy and guidelines; and

o establishing a process of internal control and financial management.



7. Program Managers

Program managers are accountable to the Deputy Minister for:

o designing and redesigning funding programs and transfer payment agreements, as well

as the corresponding financial control framework, the system of internal controls, the

program terms and conditions based on a results-based, risk-based and citizen-focused

approach.

o exercising approval authority delegated by the Deputy Minister in accordance with

financial management policies and procedures of the government;

o administering funding programs and transfer payment agreements in accordance with

this policy and guidelines;

o monitoring and reviewing funding programs and transfer payment agreements to

ensure they are meeting program objectives.

o evaluating a funding program in accordance with the results based guidelines laid out

in section 5.9.5.2 and submitting a report to the Deputy Minister.



5.9.5 Guidelines

5.9.5.0 Introduction

The guidelines outlined in subsection 5.9.5 of this manual are issued by the Deputy Minister

of the Department of Finance under the authority of Section 7 of the Financial

Administration Act.

These guidelines are issued to aid program officers who design and manage funding

programs and/or transfer agreements as well as financial officers who seek budget approval

and account for those government transfers. These guidelines are intended to assist those

officers in the following areas but are not limited to:

Correctly choosing between goods or service contracts and transfer payment agreements;

Ensuring the prospective recipient is a legal entity and has the power to enter into a

contractual agreement;

Making decisions to fund a requested project;

Effectively designing a transfer payment agreement;

Effectively designing a funding program;

Seeking appropriate approval;

Accurately accounting for government transfers; and

Evaluating funding programs and transfer payment agreements.

Some of the key aspects that both program and financial officers must observe in delivering a

funding program and transfer payment agreements are as follows:

i) A transfer payment agreement must establish clear performance expectations;

ii) A funding program must contain precise eligibility and assessment criteria;

iii) Program officers must undertake due diligence prior to approving a transfer;

iv) Payments must be made in accordance with terms and conditions;

v) Terms and conditions of a transfer payment agreement must be established following

the risk-based approach, which is described further in these guidelines;

vi) Project performance problems must be resolved quickly;

vii) Program officers must ensure that each agreement is followed up to ensure all

requirements are met; and

viii) The departments must collect money promptly if the recipient has not met the terms

and conditions of the transfer payment agreement.



Decision to use a government transfer

Paragraph 1, subsection 5.9.2 of the Government Transfers Policy states:

“Government transfers are one of the vehicles that are used to achieve government’s

goals and objectives. Before making a decision to establish a funding program or

entering into a transfer agreement, departments must ensure that it is an appropriate

vehicle to achieve departmental goals and objectives.”

Why?

Before making a decision to create a funding program or enter into a transfer agreement, the

department must consider, at a minimum, the following questions:

Does the contemplated program or transfer of resources further the government’s

priority and/or department’s program objectives?

If operational funding, is it going to be perceived as precedent setting?

Is the amount of funding requested reasonable? Request the most recent financial

statements as well as disclosure of other sources of funding.

How (Is a transfer payment the right way to pay?)

Once it is determined that the contemplated payment or program satisfies the “Why” section

above, departments must examine and establish if a planned action should be carried out

through a transfer payment agreement or other vehicles such as a service contract. If the

government is acquiring services, goods or an asset, the contractual agreement must be

classified as a service or goods contract, regardless of the form used.

Goods/service contracts versus transfer payment agreements

The definition of a government transfer states that the Government does not receive any

goods or services directly in return in exchange of resources transferred.

At times, however, the Government may acquire goods or services as a “by-product”.

Departments should examine the substance of the intended outcome. Does the

Government receive approximately equal value of goods or services in exchange for the

money provided (see “exchange transaction” in subsection 5.9.1 Definitions)? If so, the

agreement is likely to be a procurement contract even if the transaction may benefit the

contracting party, e.g. economic development, job training opportunities, etc.

A government transfer is, as the word literally indicates, a transfer of resources from a

government to another organization or an individual with an intended result of carrying

out its mandate and achieving its objectives. In other words, benefits to the government

are inherent in all government transfers, which makes the differentiation between a

service contract and a transfer payment agreement difficult at times.



The following is a decision tree that may assist in determining whether the contemplated

agreement is a service/goods contract or a transfer payment agreement:

1. Does the government directly receive goods or services and is the value of the

goods/services approximately the same as the payment made by the government?

If the answer is “Yes”, it is likely to be a goods/service contract.

Answer is “No” – go to the next question.

2. Could the invoicing by the contracting party be assumed to include profit margin

for the entity? (The government can only “assume” if the contract amount is

based on a quote or proposal without a disclosure of actual expenses to deliver

those services/goods by the contracting party.)

If the answer is “Yes”, it is likely to be a goods/service contract.

Answer is “No” – it is likely to be a transfer payment agreement.

Whom (What party do we pay?)

1. Departments must ensure the recipient is a legal entity in good standing with the power

to contract.

There are several types of entities. Departments will be required to classify transfer

payment recipients into one of the following categories when they enter the information

into a corporate system.

A. Individuals

A group of individuals that is not incorporated under any act is not a legal entity.

The legal entity in this case would be each individual.

B. Business

Business refers to a commercial enterprise whose primary aim is to earn profits.

Departments must identify which of the following types the business recipient is and

draft an agreement with the correct legal entity and business name. If the contractual

agreement is with a local business, departments should check the Corporate Affairs

Registry in the Department of Community Services to ensure it is registered as

business and is in good standing.



B.1 Sole proprietor — A sole proprietor is an individual who carries on business

by him/herself, with or without employees. This method of doing business allows

the person to extend their rights as an individual to make contracts and buy or

sell property, and requires only the registration of the "trade" or business name,

and a business licence.

When a department is entering into any form of contract with a sole proprietor

operating under a business name, e.g. “John Smith o/a Smith’s Mechanical”,

the department must ensure that the payment is made to the payee including

the business name.

B.2 Partnership — When two or more persons decide to combine their

qualifications, skills, energy and resources to go into business together, they

form a partnership. Each partner is the agent of the other, and may commit the

partnership to contracts with or without the other partners’ consent. The

partners are "jointly and severally" liable for all debts of the partnership,

which means that creditors may seize the business assets, or the personal

assets of one or more partners to pay outstanding debts.

B.3 Limited Partnership — This type of partnership consists of one or more

limited partners and at least one general partner. In this case the general

partner (a limited company) has unlimited liability and the limited partner is

liable only up to the amount of his investment. The limited partner must not

have anything to do with the management of the business, and can only share

in the profits of the business as determined by the partnership agreement.

B.4 Corporation — a corporation is a legal entity separate from the

individual owners. It has all of the rights of a natural person: it may enter into

contracts, own property, and may sue or be sued.

C. Not-for-profit organizations

Not-for-profit organizations are entities, normally without transferable ownership

interests, organized and operated exclusively for social, educational, professional,

religious, health, charitable or any other not-for-profit purpose.

NGOs, community associations and industry associations are not-for-profit

organizations.

In these Guidelines, colleges, universities and hospitals are classified as not-for-profit

organizations.

The majority of not-for-profit organizations are established under the Societies

Act. Before making a decision to fund, departments should check any local not-

for-profit organization applicant with the Corporate Affairs Registry, verify its

correct legal name and ensure the organization is in good standing.



D. Municipalities and governments

See the definition in the Government Transfers Policy (5.9.1 of this manual) for the

definition of “municipality”.

Local Advisory Councils are created by Orders In Council under the Municipal Act to act

solely in an advisory capacity and do not have the power to enter into contracts in their

own name. Section 44 of the Municipal Act empowers the government to provide them

with operational funding. No other funding may be provided to Local Advisory

Councils.

A School Board or School Council has the legal capacity to contract pursuant to the

Education Act.

Government corporations such as the Yukon Housing Corporation, Yukon Liquor

Corporation, Yukon Development Corporation and the Workers’ Compensation, Health

and Safety Board are classified as government organizations.

E. First Nations

E.1 Self-governing First Nations - Self-governing Yukon First Nations (Kwanlin

Dun First Nation, Kluane First Nation, Carcross/Tagish First Nation, Ta’an

Kwach’an Council, Teslin Tlingit Council, First Nation of Nacho Nyak Dun, Little

Salmon Carmacks First Nation, Tr’ndek Hwech’in, Selkirk First Nation, Champagne

and Aishihik First Nations, and Vuntut Gwitchin First Nation) have the power to

contract as if they were a person because of the territorial and federal Self-

Government Acts.

E.2 Indian Act Bands – In the Yukon, there are three remaining Indian Act Bands.

They are the Liard First Nation, White River First Nation and Ross River Dena

Council. The Indian Act provides these bands with the legal capacity they have.

E.3 Council of Yukon First Nations

E.4 First Nations outside the Yukon – The government may at times enter into

agreements with First Nations other than those identified in E.1 to E.3 such as the

Taku River Tlingits, Tahltan Tribal Council, Kaska Dena Council, the Dene/Metis of

the Northwest Territories, the Inuvialuit Regional Council and the Gwich’in Tribal

Council.

E.5 First Nation (development) corporations are business corporations. As with

any other businesses, departments should verify its status on the Corporate Affairs

registry before entering into an agreement.



Departments must research and ensure compliance with other Yukon government

policies and guidelines depending on the applicant.

For example, follow GAM 1.12 “First Nations Relations” for agreements with First

Nations including the Council of Yukon First Nations and any corporation owned or

controlled by a First Nation. If it is an intergovernmental agreement, the department

must comply with GAM 1.5 “Inter-governmental Relations Policy”.

2. Pursuant to paragraph 9, subsection 5.9.2 of the Government Transfers Policy:

“Any prospective recipient of a transfer payment, except for a legislated grant, must

declare any amounts owing to the Yukon Government. In principle, an entity that

owes debts to the government should not receive funding from the government. This

directive does not apply to social assistance payments or to an entity that has

arranged a mutually agreed upon repayment schedule with the government and is in

good standing.”

3. As stated in paragraph 10, subsection 5.9.2 of the Government Transfers Policy, “in

accordance with GAM Policy 3.39 Conflict of Interest:

government employees must disclose and address their involvement in applicant

organizations, either in their capacity as officers or representatives, and absent

themselves from any discussions, decision making process or any other capacity that

could be perceived to be in a conflict of interest situation. A Yukon Government

employee who holds an executive position in the recipient organization should

refrain from signing the funding agreement as there may be perception of possible

influence over the funding decision.”

Who can make a final decision?

Generally, authority to approve a transfer payment is tied to the public officer’s signing

authorities under Section 24 (prerequisite for contracting) and Section 23 (contracting

authority) of the Financial Administration Act.

If it is a transfer payment within a funding program, there is an established approval

process in the program guidelines.

In addition, as directed in paragraph 5 subsection 5.9.2 of the Government Transfers

Policy, any transfer payment agreement with a term in excess of three years must be

approved by Management Board.

A transfer of a public property to an entity outside the government is considered to be

disposal and is subject to MBD #11/93 “Management of Capital Assets and Disposal of

Surplus Public Property”.



5.9.5.2 Results-based, risk-based and citizen focused approach

Paragraph 4, subsection 5.9.2 of the Government Transfers Policy directs departments that:

“Departments must use a results-based and risk-based management approach in

designing a transfer payment program and drafting a transfer payment agreement,

while adopting a citizen-focused approach to managing programs and individual

funding agreements.”

A. Results-based management approach

A results-based management approach should help achieve a number of goals related to

accountability and evaluation. It should:

set clear roles and responsibilities for the main partners involved in delivering the

program, project or initiative (a sound governance structure);

ensure clear and logical design that ties resources (input) to expected results

(output) that shows a logical sequence of resources, activities, outputs and key

results (a results-based logic model);

have a sound performance measurement plan that allows managers to track

progress, measure results, support subsequent evaluation work, learn and make

ongoing adjustments for improvements:

A sound performance measurement plan should cover:

o Main activities of the program or project (what activities should occur?)

o Clients or target population (who are intended beneficiaries?)

o Expected results (what is to be achieved?)

o Performance indicators (how will we objectively know?)

o Data source (where will we get the information?)

o Logistical considerations (how will we measure and analyze, and at what

cost?);

set out any evaluation work that is expected to be done over the life cycle of the

program or a particular funding; and

ensure adequate reporting on results.



B. Risk-based (or risk management) approach

Risk management is a systematic approach to identifying the risks that could result in

the program or funding not meeting its goals, defining the level of risk that is

acceptable, and providing the tools to manage risks. Risk factors to be considered

include, but are not limited to:

o the amount of money involved;

o credibility and track record of the recipient;

o complexity of the project;

o the sensitivity of the project as perceived by the public;

o the events or circumstances that could significantly prevent the recipient

from achieving the project’s objectives; and

o size and capacities of the recipient organization.

The following table is an example of risk-based management model for transfer

payments.

Transfer Payments Risk Management Model

Risk in relation to

the project (Note

A)

Assessed Risk

High Low to Medium Risk Medium to High Risk High Risk

Medium Low to Medium Risk Medium Risk Medium to High Risk

Low Low Risk Low to Medium Risk Low to Medium Risk

Low Medium High

Risk in relation to the capacity of recipient (Note B)

Note A – Risk in relation to the project should be determined based on a number of

factors such as:

- the amount of money involved

- complexity of the project

- the sensitivity of the project as perceived by the public

- community support for the project



Note B - Risk in relation to the capacity of the recipient should be determined

based on a number of factors such as:

- credibility and track record of the recipient

- skills, experience, expertise, etc. of the recipient for achieving the goals of the

transfer payment

- size and sophistication of the applicant organization

- project management skills of the recipient

- accounting and record management skills of the recipient

- whether the organization’s accounting records are regularly audited

Action based on assessed risk

Low risk – Low risk funding agreements would entail standard terms and conditions

that apply to all agreements with minimal reporting requirements.

Medium risk – At this level of risk, the outputs are measurable and the reporting

requirements are aimed at providing evidence that funds were expended on the tasks.

Certain interim terms and conditions may have to be met during the life of the project

and before the final payment is made.

Medium to high risk – The concerns for this level of funding should be the

identification of the performance measures, expected results and outcomes. The

programming may be more complex and performance information requirements more

extensive. In some cases, non-audited financial statements prepared by an

independent accountant and/or audited financial statements of the project would be

required after project completion.

High risk – The concerns at this level should be the execution of the project and its

evaluation upon completion. A high risk project and high risk recipient should be

monitored closely, e.g. frequent accounting and reporting requirements, monthly

progress reports, on-site inspection by program officers, etc.

(Also refer to subsection 5.9.5.4 (xi) of the Guidelines.)

Departments should have two program officers assessing risks on the same project

and documenting rationale for the assessed risk in order to maintain objectivity and

verifiability.



C. Citizen-focused approach

While it is important to design programs and funding agreements based on results

and performance measures, departments should also consider the size and

capacities of the recipients. For example, if it is considered to be a low-risk

project, reporting requirements could be simplified so that they will not be

unnecessarily onerous to the recipient. If there is a performance measurement

reporting requirement, the requirement should be realistic and measurable in

practical terms.

Some other measures departments could take in order to incorporate a citizen-

focused approach are:

o reduce the number of cost categories in funding agreements;

o identify the circumstances where operational funding is a cost-effective

supplement to project-specific funding; or

o consider consolidated audit planning for recipients who have received

funding from more than one funding program.

5.9.5.3 Creation and management of a funding program

The Government Transfers Policy defines a funding program as a program, the goal of

which is to enable departments to achieve their departmental and program objectives by

providing funding to entities outside government. In a funding program, program

guidelines such as eligibility criteria, application and approval processes, and the

determination of funding amounts, are available to the public.

Examples of funding programs are: assistance programs such as Social Assistance, Post-

Secondary Student Grants, and Homeowners’ Grants; and project funding programs such as

the Community Development Fund, Film and Sound Incentive Program and Arts Fund.

As stated in paragraphs 2, subsection 5.9.2 of the Government Transfers Policy:

1) All funding programs must be approved by Management Board. Any

subsequent changes to the program, e.g. changes to terms and conditions of

the program, program parameters, eligibility criteria, etc., including

termination of the program must be approved by Management Board.

2) Departments shall review and evaluate transfer payment programs in

accordance with the results based guidelines laid out in section 5.9.5.2. In

any case, a report of such evaluation must be submitted to Management

Board.



Furthermore, if the contemplated funding program is to provide transfer payments that are

non-discretionary in the sense that both: (i) “who” is eligible to receive the transfer; and (ii)

“how much” is transferred are prescribed, it is considered to be a legislated grant program.

Pursuant to paragraph 3, subsection 5.9.2 of the Government Transfers Policy, any legislated

grant program must be established by an act or a regulation pursuant to an act

Examples of legislated grants are social assistance payments, Yukon Grants to students,

Home Owners’ Grants and Seniors’ Income Supplements.

A. Designing a funding program:

Creating and designing a new funding program is a very complex task. Consultation and

communication with and between stakeholders is critical to develop a successful funding

program. Consultation should include operational and functional staff and branches or

departments with experience in delivering similar funding programs.

i) Before deciding to set up a funding program, departments must ensure that it is an

appropriate vehicle to achieve government objectives.

ii) Define objectives of the new funding program. The objectives must be clearly tied to

departmental objectives and priorities.

iii) Identify and define the target group that will benefit from the funding program.

iv) Define expected results and outcomes. Once expected results and outcomes are

identified, the department may proceed with program design such as assessment criteria,

selection processes, format of transfer payment agreements, monitoring and payment

systems, and evaluation of outcome.

v) Define the program’s terms and condition. Terms and conditions of a program should

contain, at the minimum, the following items:

- A short summary of the program

The terms and conditions will become a stand-alone document for use by

departmental staff. It will be helpful to them in working with potential recipients

and in drafting agreements to place the program in the proper context.

- A clear statement of the funding program’s objectives and expected results and

outcomes.



- A clear identification of the recipient or definition of the class of eligible recipients.

- The proposed limit of the total government assistance (e.g. XX% of eligible project

costs).

- To ensure that a department is only providing the necessary amount of funding to

undertake the project successfully, consider the funding amount the recipient is

receiving from:

other Yukon government departments;

other government sources (federal, municipal); and

the recipient’s own contributions to the project.

- The method used for determining repayments by the recipient for cases where such

assistance exceeds the anticipated funding level.

- A description of the supporting material required in an application from a prospective

recipient, including a statement from Yukon government employees, elected officials

and Cabinet and caucus employees on their board or otherwise involved in their

project that they have appropriately addressed any perceived or real conflict of

interest.

- Identification of the type and nature of expenditures considered eligible costs under

the transfer program for reimbursements.

vi) Administration framework should reflect the conscious weighing of the costs of controls

versus (a) administrative costs and (b) losses in program effectiveness.

B. A Management Board submission (and a Cabinet submission, if it is a legislated

grant program) for a new funding program should include the following:

i) a clear statement of the objectives of the funding program;

ii) a clear statement of how the transfer payments further program objectives, including

identification of expected results and outcomes;

iii) a clear identification of the recipient or definition of the class of eligible recipients;

iv) proposed stacking limits, i.e. specific limits to the total Government assistance, for

example, a certain percentage of eligible project costs;

v) a description of the supporting material required in an application from a prospective

recipient, including but not limited to:

- a requirement to disclose the involvement of public servants on the recipient’s board

or committee, which may be perceived as being in a conflict situation; and

- a requirement to disclose any debts owed to the government;



vi) identification of the type and nature of eligible costs for funding purposes;

vii) the maximum amount payable to each recipient;

viii) description to demonstrate departmental systems, procedures and resources are in place

for effective management and administration of the program;

ix) if additional resources are required for viii), the identification of the total cost and FTE

to run the program, how much can be absorbed internally, and how much additional

budget resources and FTEs are requested;

x) the parameters for authorization and approval process, e.g. committee review and

approval of all applications, signatories for agreements (e.g. director up to a certain

amount, Deputy Minister and Minister up to certain amounts), etc.

xi) the basis and timing of payments, including such details as a schedule of advance and

progress payments and applicable holdback provisions;

xii) a results-based accountability framework including: performance indicators, expected

results and outcomes, methods for the reporting on performance, and evaluation criteria

to be used in the assessment of the effectiveness of the transfer payments;

xiii) a risk-based framework for audit of recipients of transfer payments, a program

evaluation plan of the program, including expected funds to be budgeted for costs

related to these requirements; and

xiv) the Management Board submission must include a communication strategy as

predetermined assessment criteria for a funding program must be made public and

applied in a consistent manner.

5.9.5.4 Drafting a Transfer Payment Agreement

A transfer payment agreement is commonly called a “Funding Agreement”, “Contribution

Agreement”, “Grant Agreement”, or “Memorandum of Undertaking”.

A transfer payment agreement can be a negotiated agreement that is signed by the

government and the recipient, or it can consist of various documents exchanged between the

parties, including a signed application form and a letter signed by a public officer who has the

appropriate authority approving the transfer payment.

A transfer payment agreement is a contractual agreement; therefore, it must contain all

elements of a legally binding contract such as an offer and an acceptance as well as a clear

description of terms, conditions and obligations of the contracting parties. If it is considered

that high risk exists as determined in subsection 5.9.5.2 of these Guidelines, e.g. a high dollar

amount, complexity of the funded project and its implications, sensitivity, etc., the

department must request a review of the agreement by the Department of Justice prior

to entering into an agreement.

Departments should consider, at a minimum, the following factors while drafting a transfer

payment agreement:

i) A transfer payment agreement must identify clear objectives and expected results.



ii) Transfer payment agreements should reflect the principle whereby transfer payment

assistance is provided for projects only at the minimum level to further the attainment

of the stated objectives and expected results.

iii) For transfer payments involving lower risks and materiality, the use of application

forms and exchange of correspondence, e.g. a letter informing the award to the

recipient signed by a public officer who has the sufficient Section 24 and 23 signing

authorities, is acceptable.

iv) For project funding, because the objective of the funding is to achieve intended results

as proposed and agreed upon by the recipient and the government, the recipient must be

required to account for the use of the funds received from the government and report on

the results actually achieved. The recipient must also declare for all funds received

from all sources for a given project before the agreement commences, as well as upon

completion of the project. The agreement for this type of transfer should include a

clause that the department has the right to undertake an audit.

vi) Project funding agreements should call for at least an interim and a final accounting of

the use of funds and the results achieved, except for smaller amounts of funding (e.g.

less than $10,000) of short duration (e.g. less than four months) where the minimum

requirements would be a final accounting, including reporting against performance

objectives.

vii) Departments should determine the required frequency of accounting by recipients that

minimizes the administrative costs of the department and the recipient, taking into

account appropriate risk factors, the likelihood of failure or diversion of funds by the

recipient to other purposes, and the department’s previous experience with the

recipient.

viii) To properly control advance payments, timely accounting must be obtained from

recipients. When it is a high dollar project, an advance should be accounted for before

any further advances are issued. Where an advance is issued, there must be at a

minimum quarterly accounting of the advance until it is cleared.

ix) Departments are responsible for determining whether recipients have complied with the

terms and conditions applicable to the transfer payment. This responsibility includes

the audit of recipients when deemed necessary.

Departments should develop a risk-based audit framework for the audit including:

Determining which recipients are to be audited;

Selecting appropriate auditors or indicating the acceptability of auditors

when retained by the recipient;

Determining whether the scope, frequency and scheduling of audits meet

program requirements;



Coordinating audits with others involved in the audit of the same recipients; and

Determining follow-up action required on audit findings.

x) Payment method

Paragraphs 6, subsection 5.9.2 of the Government Transfers Policy states:

“Departments shall make transfer payments with due regard for the government’s

cash management practices as well as the recipient’s cash flow requirements.

Installment payments and advance payments, if required, shall be made in

accordance with subsection 5.9.5.4 of the Guidelines. Any exception to this

directive must be approved by Management Board. “

Installment payments of operational funding

Operational funding must be paid in installments corresponding to the cash flow

requirements of the recipient. The minimum number of installment payments is

determined according to the total value of the operational funding as follows:

Total value of annual funding Minimum number of

installments

Up to $75,000 one

$75,001 - $150,000 Two

Over $150,000 Four

Advance payment of project funding

Project funding is normally paid on the basis of performance or as reimbursement of

expenditures incurred. Where advance payments are necessary, they should be limited

to the immediate cash flow requirements of the recipient and must not exceed the

following percentage of the total value of the funding:



Duration of Agreement

Total value of funding 4 months or longer

Less than 4

months

Initial Advance Subsequent Advances

Up to $10,000 up to 100% up to 90% Balance payable upon

completion of the

project and

submission of the

final reporting.

$10,001 - $100,000 up to 75% Estimated cash flow

requirement for the

first 4 months.

Every 4 months

based on estimated

cash flow

requirement for the

following 4 months

Over $100,000 up to 50% Estimated cash flow

requirement for the

first 4 months.

Every 4 months

based on estimated

cash flow

requirement for the

following 4 months

Departments must note, however, that paragraphs 7, subsection 5.9.2 of the

Government Transfers Policy further directs:

“Not withstanding the above, no advance payment in excess of $10,000 shall be

made to a recipient in one fiscal year when the related expenditures of the recipient

are not likely to be incurred until the following fiscal year. Advances required for

the expenditures that are to be incurred in the following fiscal year must be issued

as of April 1 and charged to an appropriation in the new fiscal year.”

xi) The following provisions must be included in a transfer payment agreement:

Legislated grants and low-risk transfers

The recipient name;

The purpose of the funding and the expected results;

The effective date, the date of signing and the duration of the agreement;

The maximum amount payable;

The conditions to be met before payment is made and the schedule or basis of

payment; and

Procedures to be followed to recover payments, should the recipient be in default of

the provisions of the contribution agreement;



Note: For an award or scholarship type of transfer to an individual where the

payment is not conditional on submission of receipts proving actual expenses

incurred, the department must obtain the individual’s social insurance number and

report the payment as part of the calendar year-end T4A listing and submit it to the

Department of Finance. For further clarification, contact the Accounting Services

Branch of the Department of Finance.

Medium to high-risk transfers

In addition, for medium to high risk transfers, the following provisions should be

included in the agreement:

Requirements for the department to receive periodic, e.g. quarterly and/or annually,

and final financial and performance reports from the recipient, certified by an

officer of the organization, including March 31 financial reporting if it is a multiple

year agreement;

A repayment requirement if the recipient fails to meet the terms and conditions of

the agreement;

A requirement to report all revenues relating to the project;

Allowable costs or the types of expenditures eligible for reimbursement;

A provision for the department to terminate the agreement and withdraw from the

project if the original objectives are not being met;

A clause to limit the liability of the government in the case where the recipient is

entering into a loan, a capital lease or other long-term obligation in relation to the

project for which the contribution is provided;

The government’s right to conduct an audit, even though an audit may not always

be undertaken;

Provisions for cancellation or reduction of future year contributions in the event

that departmental funding is not appropriated by the Legislative Assembly;

An indemnification clause for the benefit of the government;

A clause that requires the recipient not to represent itself, including in any

agreement with a third party, as an agent of the Yukon government;

A consequence of or restriction on the disposition of any assets acquired through

the contribution;

A requirement for the recipient to repay overpayments, unexpended balances and

disallowed expenses and a declaration that such amounts constitute debts due to the

Government;

A clause stating the recipient agrees that no current public officer holder or public

servant who is or may be perceived to be in conflict of interest situations shall not

derive any direct benefit from the agreement; furthermore, the recipient will

provide written statements from government employees, elected officials and

Cabinet and caucus employees on their board or otherwise involved in their

operation/project that they have appropriately addressed any perceived or real

conflict of interest; and



Name, title and address of the representatives of the department and the recipient

who have the authority to sign and execute the agreement. The representative of

the department must have sufficient Sections 24 (commitment authority) and 23

(contracting authority) signing authorities.

xii) Multiple-year agreements

Paragraph 5, subsection 5.9.2 of the Government Transfers Policy states that: “any

transfer payment agreement with a term in excess of three years shall be approved by

Management Board.”

A multiple-year agreement must have the following clause:

“The Government of Yukon will only issue payments under this agreement if the

Department of _________ receives money (appropriation) from the Yukon

Legislative Assembly for the fiscal year in which any payment is to be made.”

A multiple-year agreement must identify committed amounts for each fiscal year.

5.9.5.5 Budgeting and Accounting

A. Budgeting Government Transfers

Departments must follow Chapter 2 “Financial Planning and Budgetary Control” for

budgeting government transfers.

An additional restriction is placed on legislated grants by paragraph 3, subsection 5.9.2 of

the Government Transfers Policy, which states:

“… Budgets for legislated grants must be approved by the Legislative Assembly.

Only the Legislative Assembly may approve an increase or decrease to the budget

for a legislated grant program.

Departments must request approval to reallocate budget to/from a legislated grant

program through variance reporting exercises or a separate submission to Management

Board for inclusion in Supplementary Estimates.

B. Transfer of a Tangible Capital Asset

As stated in paragraph 8, subsection 5.9.2 of the Government Transfers Policy, a transfer

of a tangible capital asset must be recognized as an expense at the net book value of the

tangible capital asset and reported as a government transfer.



C. Accounting of Over-payment

The amount of money remaining from an advance payment at the end of a contribution

agreement and the amount of any disallowed disbursements are debts due to the

government and must be recorded as receivables and recovered. Where a recipient has

failed to provide financial reporting in accordance with the terms and conditions of the

agreement or has not used the fund for authorized purposes, a demand for repayment

must be issued.

Refunds or recovery of overpayments must be credited to the vote to which the payment

was originally charged when the refund is received in the same fiscal year. When a

refund is received in a subsequent fiscal year, the refund must be credited to prior-year

expenditure recovery.

5.9.5.6 Administration

A. Central database

As directed by paragraph 11, subsection 5.9.2 of the Government Transfers Policy,

department must enter all transfer payment agreements, except for legislated grants, into

a corporate system in the manner instructed by the Department of Finance.

B. Making payments

Departments should periodically verify the eligibility of a recipient especially in the case

of legislated grants, normally prior to making any payment including a progress payment.

Progress payments in project funding should be made on the basis of performance; that

is, as a reimbursement of eligible costs incurred or expenditures made by a recipient.

Project officers should ensure that recipients adhere to the stated terms and conditions of

agreements before asserting performance and approving payments on projects. Project

officers should ensure that all required reports including financial statements are

meaningfully reviewed when they are received. Where appropriate, every attempt should

be made to recover money that may be owed from a project.

C. Implication

Generally, when transfer payments are made in the public interest or for charitable

purposes, the Canada Revenue Agency does not regard them as payment for a supply,

and, as such, there is no GST on the payment.

However, the recipient of a government transfer may be subject to GST on their

purchases of goods or services. The government may provide additional transfer

payments to deal with the recipient’s unrecoverable portion of GST (e.g. net of rebate)

and include this as an eligible cost in the transfer payment agreement.



5.9.5.7 Reporting

A. Main Estimates

In the Main Estimates, the schedule of transfer payments shall report transfer payments in

the following two categories: “Legislated Grants” and “Other” transfer payments.

A funding program approved by Management Board may be reported by total, rather than

listing all planned recipients. In addition, departments may report transfer payments by

initiative or a group of anticipated recipients. Departments should consult with the

Management Board Secretariat if they are not clear on the reporting method of certain

types of transfer payments. The department should also consult with the Management

Board Secretariat if it contemplates to transfer a non-monetary asset such as a tangible

capital asset to a party outside the government.

B. Public Accounts

In the Public Accounts, the schedule of government transfers shall report government

transfers in the following three categories: “legislated grants”, “other transfer payments”

and “transfers of non-monetary assets” (if any). Transfers of non-monetary assets

include donations of tangible capital assets or inventories that have been recorded as

assets as well as a transfer of a tangible capital asset to a third-party at a consideration

that is significantly below the asset’s fair value.

A funding program approved by Management Board may be reported by total, rather than

listing all recipients. A transfer payment that was made outside approved funding

programs should be reported individually.

If there is uncertainty as to the reporting method of a certain government transfer, the

department should consult with the Financial Accounting unit of the Department of

Finance.


Section 5.10 Purchasing of Goods and Services Amended: 06/2008

5.10 PURCHASING OF GOODS AND SERVICES

The purchase of goods and services is subject to the Contract Regulations and

Contracting Directive. Section 39 of the Environment Act also states: "Ensure that

standards for conservation of the environment and sustainable development are

incorporated in the purchasing policies and practices of the Government of the Yukon."

Specific guidelines are outlined in the Supply Services Manual. The Department of

Highways and Public Works purchases all material required by the Government.

However, the Deputy Minister of the Department of Highways and Public Works may

assign direct purchasing authority to departments. This authority is delegated where

there is an advantage to this method over the more costly requisitioning and purchase

procedures.


Section 5.12 Operations and Maintenance and Capital Expenditures Issue Date: 12/92

5.11 TRAVEL

All government travel must be carried out in accordance with the Management Board

Directive on Government Travel. Employees are required to complete the Travel

Authorization and Claim form YG440 as outlined in the directive.

All Travel Advances must be accounted for within 10 working days of return from trip.

All previous advances must be accounted for prior to issuance of any further advances.

Only one advance can be issued for any particular employee.

Payroll deduction may be initiated for the full amount if any travel advance is outstanding

more than thirty days from date of return from the trip. Departmental finance officers are

responsible for initiating this payroll deduction. The employee must be warned in writing

twenty days prior to a payroll deduction that failure to produce a travel claim will result

in such a deduction.


Section 5.12 Operations and Maintenance and Capital Expenditures Amended: 04/2004

5.12 OPERATIONS AND MAINTENANCE AND CAPITAL EXPENDITURES

Governments have typically used the classification of “Operations and

Maintenance” expenditures and “Capital” expenditures for budgeting and

reporting purposes. In general, if an item meets the definition of a tangible capital

asset (see subsection 8.7 of this manual), it would be a capital item. Any other

items would be Operations and Maintenance.

The Government may, however, choose to vote certain items as Operations and

Maintenance, and certain items, which may not necessarily meet the definition of

tangible capital assets, as Capital. As this is based on budget decisions of the

Management Board, departments should seek direction from the Management

Board Secretariat if it is not clear whether a certain item should be budgeted and

reported as an Operations and Maintenance expenditure or a Capital expenditure.

In the Public Accounts of the Government, except for the expenditures that are

considered to be balance sheet transactions, both Operations and Maintenance

expenditures and Capital expenditures are reported as expenses.

The expenditures that are considered to be balance sheet transactions include:

Acquisition and development costs of tangible capital assets;

Development costs of land held for sale;

Loan advances made pursuant to an Act; and

Principal portion of loan or capital lease payments.


Section 5.13 Payments Amended: 03/2012

5.13 PAYMENTS

5.13.1 Payments Directive

5.13.1.0 General

Authority

On March 7, 2012 (MBM #12-05-01), Management Board revoked MBD #10/84 “Payments

Directive” and replaced it with subsection 5.13.1 “Payments Directive” of the Financial

Administration Manual. This Directive is issued pursuant to section 38(1) of the Financial

Administration Act, and can be revised only with the approval of Management Board.

Application

This Directive applies to every payment made out of the Consolidated Revenue Fund.

Objective

The objective of this Directive is to provide direction with respect to the form in which

payments from the Consolidated Revenue Fund are to be made and authenticated, as well as

procedures to deal with issued payments.

5.13.1.1 Definitions

(a) “bank” means:

(i) in respect of any matter in Canada, a bank to which the Bank Act (Canada)

applies and any branch thereof; and

(ii) in respect of any matter outside Canada, an institution that carries on the business

of banking.

(b) “cheque” means a negotiable instrument in the paper form drawn on a bank

account established in accordance with this Directive and the Financial

Administration Act.

(c) “Corporation” means the Yukon Liquor Corporation, the Yukon Housing

Corporation or the Yukon Development Corporation.

(d) “electronic funds transfer” means the electronic exchange or transfer of money

from one account to another, either within a single financial institution or across

multiple institutions, through computer-based systems. An electronic funds

transfer may be sometimes referred to as a direct deposit or a wire transfer.



5.13.1.2 Directive

1. Pursuant to Order-In-Council 1990/123 made under section 12 of the

Financial Administration Act, only the Deputy Minister of the Department

of Finance may open or close a bank account for the Consolidated Revenue

Fund.

2. Every payment out of the Consolidated Revenue Fund shall be made by the

method authorized by the Deputy Minister of the Department of Finance,

except a payment by a Corporation, and in respect of a payment of a

Corporation, by the method authorized by the Chief Financial Officer of the

Corporation.

3. (1) Except in the case of a payment by a Corporation, the Deputy Minister of

the Department of Finance shall be responsible for the procurement and

safekeeping of cheques and equipment that issues and authenticates

payments.

(2) The Chief Financial Officer of a Corporation shall be responsible for the

procurement and safekeeping of cheques and equipment that issues and

authenticates payments made by the Corporation.

4. (1) Every cheque issued out of the Consolidated Revenue Fund, except for

those issued by a Corporation, shall bear the signatures of the Minister and

the Deputy Minister of the Department of Finance.

(2) A cheque issued by the Yukon Liquor Corporation shall bear the signatures

of the Minister of the Department of Finance and the President of the

Corporation.

(3) A cheque issued by the Yukon Housing Corporation shall bear the

signatures of the Chairperson of the Board of Directors and the President of

the Corporation.

(4) A cheque issued by the Yukon Development Corporation shall bear the

signatures of the Chairperson of the Board of Directors and the Chief

Executive Officer of the Corporation.

5. (1) A cheque may be issued by means of equipment capable of reproducing

facsimiles of the signatures of persons authorized to sign cheques under this

Directive.

(2) If there is a change in the persons authorized to sign a cheque under this

Directive, the facsimiles of the signatures then in use for a cheque issued by

equipment shall remain valid for ninety days after the change.



6. Every cheque shall:

(a) include the words “to the order of” and “Yukon Consolidated Revenue

Fund”;

(b) bear the name of the payee;

(c) be for a specified amount of money set out in both words and figures;

(d) bear no alterations or erasures in the amount of money or in the name of the

payee; and

(e) unless the Deputy Minister of the Department of Finance, or, in the case of a

Corporation, the Chief Financial Officer of the Corporation, otherwise

directs, bear the date of the day on which the cheque is issued.

7. (1) If a cheque is reported by the payee not to have been received or delivered

to the payee or it has been lost, destroyed or stolen, a replacement cheque

may be issued in the name of the payee on completion by the payee of an

affidavit or statutory declaration in a form approved by the Deputy Minister

of the Department of Justice containing:

(a) a statement that the cheque has not been received or delivered to the payee;

and

(b) an undertaking that, if the original cheque is received or is delivered to

them, the payee will return it to the Deputy Minister of the Department of

Finance.

(2) Despite subsection 7(1), the Deputy Minister of the Department of Finance

may authorize the issue of a replacement cheque if a cheque payable to a

bank for the credit of a third party is reported by the bank not to have been

received or delivered.

(3) Subsections 7(1) and 7(2) do not apply to a Corporation. A Corporation

shall establish procedures with respect to handling of lost, destroyed or

stolen cheques, and issuing of a replacement cheque.

8. (1) If it is necessary to cancel a cheque or electronic funds transfer for any

reason, the cheque or a document that substantiates the transfer shall be

marked “CANCELLED” across its face in bold letters.

(2) Every cancelled cheque and cancelled electronic funds transfer shall be

accounted for.

9. (1) If a cheque has not been cashed by a payee and has not been returned within

twelve months of the date of issue, the amount of the cheque may be

credited to the Consolidated Revenue Fund.

(2) If a cheque has not been cashed by a payee and has been returned as

undeliverable, the cheque may be cancelled and the amount of the cheque

may be credited to the Consolidated Revenue Fund.



(3) If a cheque has not been cashed by a payee or has been cancelled as

undeliverable in accordance with this section, the right of the payee to

collect the amount of the cheque is not extinguished.

10. (1) The Deputy Minister of the Department of Finance may open or close

a bank account based upon a written request from the Deputy Minister

of a department, demonstrating that the current banking arrangement

does not meet the department’s operational requirements.

(2) Sections 3(1), 4(1), 5, 6(a) and 7 do not apply to a cheque issued for

the payment of money from a bank account established in accordance

with subsection 10(1). The Deputy Minister of the department that

has requested a bank account shall be responsible for internal controls

and management of the bank account.

(3) A cheque issued from a bank account established in accordance with

subsection 10(1) shall bear the signatures of two public officers. The

department that maintains a bank account shall deliver to the

Department of Finance the names and titles of public officers who are

authorized to sign for the bank account. The department shall notify

the Department of Finance in writing of any subsequent changes to the

names or titles of public officers within ten working days from the

date of the change.

(4) The department that maintains a bank account shall deliver to the

Department of Finance the bank reconciliation as at March 31 of every

fiscal year and as required. The department shall also provide to the

Department of Finance any information on the bank account as

requested.

(5) Subsections 10(1), (2), (3) and (4) do not apply to a Corporation.



5.13.2 INTEREST ON OVERDUE PAYMENTS

The payment or charging of interest on overdue account is subject to the Regulation

entitled “Interest on Overdue Accounts and Payment of Interest.”

This regulation does not apply to a debt obligation or an account where the payment or

receipt of interest is specified under another act, agreement or contract.

Interest shall not be paid or charged where the obligation results from invoices

improperly prepared or addressed.

Interest shall not be paid to enterprises or governments which do not pay interest to the

Government of the Yukon.

Definitions

“contract” means a contract as defined in the Financial Administration Act;

“debt obligation” means any invoice, statement, voucher or other document claiming

payment that is lawfully due and payable by the government under a contract, but does

not include interest on borrowed money;

“vote” means that part of an appropriation Act identified as a vote and authorizing the

payment of a specified amount from the consolidated revenue fund for specified purposes

“government” means the Government of the Yukon.

“past-due” means that a period of thirty days or more has elapsed from the date of the

satisfactory receipt of goods or services by the government under a contract or the date

that the debt obligation was received by the government, whichever is later.

Payment of Interest

Interest shall be paid on a debt obligation that is past-due.

Interest shall be paid from the same vote as the debt obligation to which the interest

applies.

Interest on a debt obligation that is past-due shall be calculated at the current Bank of

Canada rate.

No interest shall be paid on a debt obligation that is past-due, to a municipality, a

provincial government or the Government of Canada.



5.13.2 (Continued)

Calculation

I = A x R x (P-30)/365

I = Interest

A = Invoice amount

R = Bank of Canada rate in effect on the day the calculation is being made. This rate is

provided by the Department of Finance.

P = Period outstanding. This is from the date of receipt of the invoice or receipt of the

goods, whichever is later, to the date of release of the cheque.


Section 5.14 Credit Cards Amended: 01/2006

5.14 CREDIT CARDS

5.14.1 General

The Government of Yukon currently utilizes fuel cards for purchases of fuel for

government vehicles, the corporate travel system card for airline and hotel reservations,

and acquisition cards for the purchasing of low-dollar value goods and services.

The Department of Highways and Public Works administers fuel cards, while the

Department of Finance is responsible for any other type of corporate credit card

programs.

5.14.2 Acquisition Card Policy

This policy was reviewed and approved by Management Board for general application

in the Government (MBM#01-02-05). This policy can be revised only with the

approval of Management Board, with an exception of the authority to amend the dollar

amount associated with the "low-dollar value purchase" defined in subsection 1.6 of the

policy, which has been delegated to the Deputy Minister of the Department of Finance

(MBM#01-36-03).

1. Definitions

1.1 The “Card” is a credit card issued under a Yukon Government acquisition card

program.

1.2 The “Card Program Coordinator” is the designate of the Department of Finance

who oversees Yukon Government’s acquisition card program.

1.3 A “Card Administrator” is the departmental designate who is responsible for the

administration of a Yukon Government acquisition card program. Prior to the

implementation of the Card program, the deputy minister of the department must

designate a Card Administrator and send a copy of the designation to the

Department of Finance and the Department of Highways and Public Works,

Supply Services, Procurement Services Unit.

1.4 A “Cardholder” is an employee of the Government of Yukon who has been

issued a Yukon Government acquisition card, and who has signed the

cardholder’s agreement.

1.5 The “Card Issuer” is the financial institution that issues Yukon Government

acquisition cards.

1.6 “Low-dollar value purchase” is a purchase of goods or services within the Yukon

Territory that is $1,000 or less.



5.14.2 (Continued)

2. Scope and Limitation

2.1 The use of the Card is limited to low-dollar value purchases as defined in 1.6,

except as provided for in 2.3 and 2.4.

2.2 The Card may be only used within the Cardholder’s delegated authorities

pursuant to Sections 23 (contracting authority) and 24 (certification prerequisites

for contracts) of the Financial Administration Act.

2.3 The Card may be used for direct purchases outside the Yukon if it is in

accordance with the existing Department of Highways and Public Works’

purchasing policies and authorizations.

2.4 In exceptional cases, such as when an employee purchases goods frequently on

standing purchase orders, the deputy minister of the department may raise the

transaction limit to in excess of $1,000. The Card Administrator shall maintain a

list of those standing purchase orders and the names of the employees with the

limit over $1,000 for verification purposes.

2.5 The outstanding balance of the charges made to the Card at any time shall not

exceed $10,000, except as authorized by the deputy minister of the department.

2.6 The Card must not be used for the following types of expenses:

cash advances

travel related expenses, e.g. accommodation, meals, purchase of air tickets, car

rental (see 2.11 regarding an exemption for forest fire crew)

expenses relating to the operation and maintenance of vehicles used for

government business purposes, e.g. fuel and repair

entertainment expenses

payment of invoices – the Card is intended for making payment at the point of

sale

payment of course fees that is a taxable benefit

personal use

2.7 Only the person whose name appears on the Card may use it.

2.8 A Cardholder may use the Card only for the expenses that are within the

expenditure codes and merchant categories as authorized in the application form.

2.9 For authorized acquisition card purchases, if a potential vendor accepts the

acquisition card, the Card shall be used.

2.10 The Card will have an imprint specifying that the Yukon Government is GST

exempt. A Cardholder must provide a copy of the clause that certifies the Yukon

Government is GST exempt when requested by the supplier.



5.14.2 (Continued)

2.11 In July 2005, Management Board authorized an exemption to the restriction of

travel related expenses for Wildland Fire Management Unit, Protective Services

Branch, Department of Community Services, as follows (MBM#05-18-15):

This exemption applies only to expenses incurred by Wildland Fire

Management Unit, Protective Services Branch, the Department of

Community Services, arising from fire crews travelling to or from fires, base

changes and repositioning and related fire fighting training. Cards will be

issued to crew leaders who will be responsible for paying for all allowable

expenses for their entire crew. Cards will not be issued to individual crew

members for this purpose. A blanket travel authorization will be issued

covering the crew. The travel authorization must identify all the names of

the individuals working as part of the crew. Travel claims will not be

submitted for meals and accommodation when using the Acquisition Card

for fire crew travel.

Allowable travel expenses include accommodation, meals, rental vehicles,

laundry and taxis. Accommodation must be obtained at the government rate

and the cost of meals per individual must not exceed the daily meal

allowance as specified in the Travel Directive (MBD#13/84). Payment for

laundry expenses must be reasonable and receipts must be provided. Phone

calls home are not covered by this exemption. Employees claiming

reimbursement for phone calls must submit a single claim for the fire season

with receipts attached.

GST/HST does not apply to these bulk purchases made by Wildland Fire

Management Unit crew leaders. (Amended per MBM #12-11-03, May 23,

2012)

The following documentation must be submitted with the Acquisition Card

reconciliation:

Signed (acknowledging the receipt of goods/services) receipts;

Details of purchases, e.g. itemized restaurant bills; and

Names of individuals whose expenses are paid.



5.14.2 (Continued)

Financial controls, performed by the Department of Community Services,

must include:

Training all cardholders;

Ensuring appropriate signing authorities are delegated to

cardholders;

Monitoring monthly transactions on the Card and paying the

balance on time; and

Performing periodic reviews of these expenditures.

The Department of Finance is directed to continue to monitor card use and

has authority to rescind this exemption if Cards are not used in accordance

with the directions contained herein.

3. Responsibilities of the Card Program Coordinator

3.1 The Card Program Coordinator coordinates and manages Yukon Government’s

acquisition card program at the corporate level and is the contact with the Card

Issuer.

3.2 The Card Program Coordinator reviews new Card applications and requests for

changes for completeness and reasonableness, and forwards them to the Card

Issuer for processing.

3.3 The Card Program Coordinator forwards Card cancellation notices received

from departments to the Card Issuer.



5.14.2 (Continued)

4. Responsibilities of the Card Administrator

4.1 The Card Administrator approves new Card applications, changes and

cancellations for the department responsible. The Card Administrator then

forwards those documents to the Card Program Coordinator in the Department

of Finance.

In approving Card applications, the Card Administrator ensures that the

following information is provided:

name of the individual

per transaction dollar limit and credit limit

budgetary area that the applicant is authorized to charge to, i.e. name of the

department, program and unit if applicable

other case-by-case restrictions (such as merchant category)

statement address

applicant’s signature

authorizing signature of the applicant’s supervisor

Upon termination or transfer of the Cardholder, the Card Administrator must

cancel the Card immediately.

4.2 In approving the application, the Card Administrator must ensure that the

applicant has the appropriate Section 23 (contracting) and 24 (commitment)

signing authorities.

4.3 The Card Administrator must ensure that payments to the Card Issuer be

processed in a timely manner to avoid paying interest and to maximize the

rebates payable to the Yukon Government.

4.4 The Card Administrator must maintain a list of the Cardholders’ names and

signed Cardholder agreements, and monitor the appropriate use of the Card.

The Card Administrator may issue internal policy and procedures to ensure

economical, efficient and secure use of the Card. The Card Administrator may

revoke the Card if a Cardholder misuses or willfully disregards the Card policy.



5.14.2 (Continued)

5. Responsibilities of the Cardholder

5.1 The Cardholder must read and sign the Cardholder Agreement.

5.2 The Cardholder must keep the issued Card safe and secure, along with any

documents that indicate the Card number and/or the Cardholder’s signature.

5.3 The Cardholder must ensure that the Card is used in accordance with the policies

and procedures outlined in Section 2.

5.4 The Cardholder must maintain a log of Card purchases with the associating

purchase records, such as sales slips and credit card copies, and is required to

reconcile his/her monthly purchases with monthly statements. The Cardholder

must forward the reconciled statement with appropriate expenditure codes along

with the supporting purchase records for a requisition of payment in a timely

manner to avoid paying interest.

5.5 The Cardholder must resolve any billing disputes without delay.

5.6 The Cardholder may not pass on the Card to any other employee. This also

applies to a situation where another employee is acting in the Cardholder’s

position.

5.7 The Cardholder must report a lost Card immediately to the Card Issuer and the

Card Administrator.

5.8 The Cardholder must notify the Card Administrator immediately of any changes

in name, business address or telephone number.

5.9 If the Cardholder is transferred or leaves the department, he/she must return

his/her Card to the Card Administrator for immediate cancellation and action to

pay the outstanding balance.

5.10 The Cardholder is to ensure GST is not charged. The Cardholder must provide a

copy of the clause that certifies the Yukon Government is GST exempt if

requested by the supplier.


Section 5.15 Assigned Debts Issue Date: 12/92

5.15 ASSIGNED DEBTS

5.15.1 General

This section outlines the procedures to be followed in order to make payments to

assignees when authorized to do so. Assignment of debt is subject to the “Assignment

of Debt” Regulations.

It is of paramount importance that, once the assignment of a debt has been

acknowledged by the Deputy Minister of Finance, all future payments against that debt

are made to the assignee until the debt has been discharged. Any payments made to

anyone other than to the acknowledged assignee could place the Government of the

Yukon in the position of being legally liable to the assignee for the payment an

responsible for the recovery of the unauthorized payments.

5.15.2 Definitions

The following definitions are used with respect to the assigned debt procedures

outlined in this section.

Assignment

The transfer of all rights, title and interest in a debt owed by the Government of the

Yukon, made by the assignor to the assignee.

The assignment must be a transfer of the whole amount owing; a portion of a debt

cannot be assigned.

Contract

Means a contract involving the payment of money by the Government of the Yukon.

Debt

Means any existing or future debt due or becoming due by the Government of the

Yukon.

Garnishment and Third Party Demands

Garnishment and third party demands are legal processes whereby one person, pursuant

to a court order, can attach money due to a second person which is in the hands of a

third person.

Paying Officer

Means any person designated as such by regulation.



5.15.2 (Continued)

Prescribed

Means prescribed by regulation.

Notice of Assignment

Notice in the prescribed form of an assignment shall be given to the Government of the

Yukon by serving it on or sending it by registered mail to the Deputy Minister of

Finance, together with a copy of the assignment accompanied by such other documents

completed in such manner as may be prescribed.

Notice of Acceptance

Service of the notice of acceptance is not effected until acknowledgement of the notice,

in prescribed form, is sent by the Deputy Minister to the assignee by registered mail.

5.15.3 Debt Assignment

General

Except as provided in the Financial Administration Act or any other act of the Yukon:

A Government of the Yukon debt is not assignable

No transaction purporting to be an assignment of a Government of the Yukon

debt confers on any person any rights or remedies in respect of such debt.

Generally speaking, the only Government of the Yukon debt that may be assigned is a

debt that is an amount due or becoming due under a contract. This does not include a

security deposit furnished under a contract.

As prescribed by regulations:

The government is not bound by an assignment of salary or wages or any other

debt unless the Deputy Minister of Finance gives his consent,

When consent is given by the Deputy Minister of Finance for any assignment, it

is the policy of the government to accept assignments to a chartered bank only.

Action by Departments

When a notice of assignment is received by a department from a bank or other

assignee, it should be immediately forwarded to the Deputy Minister of Finance for

acknowledgement and necessary action.



5.15.3 (Continued)

Action by Department of Finance

On receipt of a notice of assignment a Department of Finance official will take the

following action:

Obtain legal advice where necessary,

Acknowledge receipt and, if desired, acceptance of the assignment in accordance

with regulations,

Ensure that all payments that would have otherwise been made to the creditor

(assignor) are stopped.

Ensure the assignment is in the proper format and signed as follows:

i) Sole Proprietor:

Signed by the sole proprietor with his/her normal signature in the presence of

a witness who also must sign. If operating under a business name this name

must be printed above the proprietor’s signature.

ii) Partnership:

One or more of the partners must sign the contract in their normal signatures

in the presence of a witness who also must sign. If operating under a business

name, it too must be printed above the signature(s).

iii) Limited Company:

Signed by duly authorized signing officers of the company in their normal

signatures designating against each signature the official capacity in which

the signing officer acts. The corporate seal of the company must also be

affixed to the contract. If the contract is signed by officials other than the

president and secretary of the company or the president and secretary-

treasurer of the company, a copy of a by-law or resolution of the board of

Directors authorizing them to do so must be submitted with the contract

documents.

Ensure that the assignee forwards the original or a notarized certified copy of the

actual assignment together with necessary supporting documentation.

Ensure that all applicable future payments against the debt are made to the

assignee. If a payment is made to someone other than the acknowledged assignee,

the government may remain legally liable to the assignee for the payment.

When an assignment is received for a creditor who already has an assignment,

garnishment or third party demand against them, the matter must be referred to the

Department of Justice for legal direction.

All assignments and garnishments for the Government of the Yukon, are centrally

controlled by the Department of Finance. Departments should refer any inquiries on

these subjects to the Department of Finance.